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Johannesburg - South Africa's debt ratio still seems much too high for an emerging nation that hopes to achieve sustained growth and realise the goal of a better life for all, said central bank governor Gill Marcus on Friday.
In a public statement to mark the beginning of national savings month, Marcus said that South Africa's ratio of household debt to annual income in the first quarter of 2010 declined slightly to 78.4%, but is still too high.
For the average household, if its income for the year was 100, its level of debt was 78.4. And of the 100 income, more than eight had to be paid as interest on loans, leaving less income for other purposes.
Marcus says a higher savings rate is therefore not only one of the main concerns of the nation - it should be a priority for every family with enough money to put a little away.
"Savings secure the future," she says.
"South Africa is starting to recover, though relief should perhaps be mixed with a little care at this early stage. It is important that families take the lessons the recent past has taught us and put them to work as we try to put the recession behind us."
Marcus points out that pressure on the family food bill is beginning to come down. For the family finances more generally, money now retains its purchasing power better than before. The threat that the savings that people put away for the future will buy less and less has become weaker, with nest-eggs no longer being shattered by inflation.
Families should look to move along the path to recovery - not by spending carelessly, but by making provision for their own long-term future.
"By focusing on keeping prices steady and fighting to keep inflation low, we at the South African Reserve Bank are creating the best atmosphere for our society in which people will be helped to save and to do long-term planning.
"We are providing the insurance no other insurer can hope to provide, and that is to the poor and low-income earners of South Africa. What we are doing is to protect their small amount of resources by making sure that they still have the power to buy or can afford to buy with their money.
"This is the best gift that a government can give to its people," concludes Marcus.
- I-Net Bridge