Finance Minister Trevor Manuel said on Tuesday evening that South Africans were not adequately saving for tomorrow and preferred instead to consume in a US-like manner.

He said households were highly indebted and consuming in a manner that mimicked patterns in the US.

“They live on debt… and are highly leveraged. It is not a basis of stability,” said Manuel.

“If they are borrowing for consumption then there is something wrong in the equation,” he emphasized.

Manuel said inflation targeting was a necessary policy as inflation hit the poor and those relying on a fixed salary the hardest and thus price stability was needed.

He noted a preferable price stability level would be two percent.

Stability

Consumer inflation in South Africa is currently running at 11.6 percent and has broken through the six percent upper target band for fifteen months running and is due to do so again this month.

Manuel was speaking at a Mail and Guardian sponsored debate entitled “The great economic policy debate: what does the future hold?”, which was moderated by Judge Dennis Davis.

Davis praised Manuel for stepping forward and taking accountability and talking about some tough issues facing the country in an open forum.

AFP