South Africa under pressure to provide $600M fuel relief
The Iran war drove petrol prices to record highs in the continent’s biggest economy. South Africa is facing growing pressure from labor unions and business groups to provide around $600 million in fuel relief, after the Iran war drove petrol prices to record highs in the continent’s biggest economy. The calls heap pressure on the coalition government to loosen its purse strings, threatening to undermine its reputation for fiscal discipline just as Finance Minister Enoch Godongwana prepares to present his three-year fiscal plan later this month. South Africa’s biggest labor federation, Cosatu, described the price shock, which sent a liter of fuel above 30 rand (almost $2) for the first time, as “ a cost of living crisis ” because workers spend nearly a third of their wages on transport. In response, the central bank has raised its main interest rate twice this year and warned in its monetary policy review this week that it has adopted a “ firefighting ” stance before energy prices spill over into broader inflation. The raised borrowing costs apply a secondary squeeze on households and businesses demanding fiscal relief.
The Iran war drove petrol prices to record highs in the continent’s biggest economy. South Africa is facing growing pressure from labor unions and business groups to provide around $600 million in fuel relief, after the Iran war drove petrol prices to record highs in the continent’s biggest economy. The calls heap pressure on the coalition government to loosen its purse strings, threatening to undermine its reputation for fiscal discipline just as Finance Minister Enoch Godongwana prepares to present his three-year fiscal plan later this month.
South Africa’s biggest labor federation, Cosatu, described the price shock, which sent a liter of fuel above 30 rand (almost $2) for the first time, as “ a cost of living crisis ” because workers spend nearly a third of their wages on transport. In response, the central bank has raised its main interest rate twice this year and warned in its monetary policy review this week that it has adopted a “ firefighting ” stance before energy prices spill over into broader inflation. The raised borrowing costs apply a secondary squeeze on households and businesses demanding fiscal relief.