South Africa Short-term interest rate: End of month: Treasury bill Rate: 91 days was reported at 6.64% per annum in November 2022, up from 6.12% per annum the previous month. For more data, see the following table. With effect from 8 January 2016, an amendment to the Law on Prescribed Interest Rates has been promulgated to ensure that the prescribed interest rate is automatically linked to the repo rate of 3.5% above the aforementioned rate, which will enter into force 2 months after the adjustment of the repo rate and will be published by the Ministry of Justice and Correctional Service in the Official Gazette. Moreover, our understanding of the facts is that the interest rate cited in the Minister`s last communication is indeed incorrect and does not correspond to the repo rate in effect at that time (which was 4.5% – the rate in the last notice should have been 8%). In addition, the Minister did not release the four interim changes to the repo rate until the last announcement. The image reproduced in the gazettes is both false and incomplete. The prescribed interest rate has been changed to 7.25% per annum effective January 1, 2022. The previous interest rate was 7.00%. According to the Law on Prescribed Interest Rates, interest on debts for which no interest rate is prescribed is calculated at the repo rate plus 3.5%.
The prescribed rate of interest applies to all debts, unless another rate of interest is determined by law, trade usage or agreement between the parties. The parties may therefore avoid the application of the prescribed interest rate by agreeing to a different interest rate, subject to other applicable laws such as the National Credit Act, which may limit the amount of interest that may be charged. The prescribed interest rate appeared to be locked at 15.5% per annum for an extended period of time, despite fluctuations in SA Reverse Banks` redemption rate (commonly referred to as the reverse repo rate), the rate that had previously affected changes in the prescribed rate. This rate of 15.5% per year applied between 1 October 1993 and 31 July 2014. * The Reserve Bank of South Africa changed the “repo rate” effective September 22, 2022 with effect from October 1, 2022. (b) The member of the Cabinet responsible for the administration of justice shall publish, whenever the Reserve Bank of South Africa adjusts the redemption rate, the revised interest rate provided for in paragraph (a) by means of a notice in the Official Gazette. In Davehill (Pty) Ltd v Community Development 1988(1) SA 290(A), it was held that the prescribed rate of interest is fixed at that time and remains constant, although the Minister may charge different interest rates from time to time. Thus, effective January 8, 2016, the prescribed interest rate was linked to the repo rate.
The wording of paragraph 1(2)(c) is clearly mandatory. Accordingly, and on the basis of a clear interpretation of the amended law, against which no legal challenge has been raised and to which the general principles of legal interpretation apply, the currently prescribed interest rate, as of 1 September 2022, is 9% per annum and may change on the first day of the second month following any announcement of a change in the repo rate. 2(a) For the purposes of paragraph 1, the interest rate shall be the redemption rate fixed from time to time by the South African Reserve Bank plus 3.5% per annum. The following is a table of changes in the prescribed interest rate since 1993: Interest rate on loan amountsupdated September 13, 2022 If the Reserve Bank changes the repo rate, a new prescribed interest rate will take effect on the first day of the second month following the month in which the new repo rate is announced. The interest rate applicable for each debt is the interest rate applicable to the payment on the due date or on the date of the request for payment if there is no fixed maturity date. This interest rate applies even if the prescribed interest rate changes at a later date. Until the introduction of the Judicial Matters (Amendment) Act 2015 (“the amendment”), which was introduced on 8 May. In January 2016, the prescribed interest rate was set in accordance with the Prescribed Interest Rate Act, 55 of 1975 (“the Act”). For the period from 1993 to July 31, 2014, this rate was 15.5% per year and increased to 9% from August 1, 2016 until the amendment came into force. 1. Where interest is due on a debt and the interest rate at which interest is to be calculated is not governed by any other law, agreement, trade practice or otherwise, such interest shall be calculated at the rate laid down in paragraph 2(a) on the date on which such interest commences, unless: A court of law because of special circumstances related to this debt orders otherwise.
It also appears that the publication of a notice by the Minister on the change in the prescribed interest rate on the first day of the second month is only of temporary interest. What is really interesting is the pension sentence. We will continue to monitor this space. The latest announcement is correct with respect to the interest rate applicable from 1 May 2022, but since 9 October 2020, the Minister has not announced any change to the repo rate in the latest communication.
