Load-shedding to push SA into recession: Reserve Bank

The Reserve Bank says the current load-shedding cycle is likely to push South Africa's economy into recession. The bank says the power cuts will add more strain to the sluggish economy. Courtesy #DStv403

JOHANNESBURG - The SA Reserve Bank (SARB) says the current cycle of load-shedding is likely to push the economy into recession.

The bank says the power cuts will add more strain to the sluggish economy.

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At the same time, the SARB says government debt is continuing to rise as it spends more money on state-owned companies.

“Load shedding could raise the possibility of recession. Our measure of intensity is the number of days and the stage of load shedding,” said SARB lead economist, Iaan Venter.

The Reserve Bank says the effects of the sustained load shedding in the fourth quarter of the year could result in the country's economy growing even less than its anticipated 0,5 percent prediction.

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“The reasons is the wage bill, its higher debt servicing costs and the additional costs to SOEs, particularly Eskom but others as well,” said Venter.

Recently both Moody's and S&P credit rating agencies warned that the government needs to rein in its debt levels and reduce its spending -including on the public sector wage bill - or face a downgrade.