By Vernon Wessels

Johannesburg - High interest rates have squeezed borrowers into the bad books.

And the debt burden has moved considerably to lower-income South Africans from the middle-income and higher-income brackets.

Almost 6 800 civil debt summonses were issued daily during April, while more than 4 400 civil debt judgments were recorded each day in magistrate's courts around the country for the same month, according to data released by Statistics SA yesterday.

The number of civil summonses rose 1.2 percent between January and April to reach 129 070 at the end of April compared with the same period last year.

Civil judgments increased by a whopping 16.4 percent over the same period to 83 895, while the value of judgments dropped 7.2 percent to R538.9 million.

The largest contributor to the increase were an 8.5 percent surge in the number of people not repaying cash loans.

There was a 2 percent jump in unpaid credit cards, dishonoured cheques, promissory notes and bills, and a 3.5 percent increase in other kinds of bad debt, such as outstanding salaries and wages and medical fund debts.

Mike Schussler, an economist at Tradek, said more people would fall deeper into debt as there was usually a lag of about a year between interest rate cuts and the effects on budgets.

The Reserve Bank hiked interest rates by 4 percentage points last year in a bid to stem inflation caused by the rand's 2001 collapse.

Some economists felt this was overkill after a too radical reduction in interest rates shortly before the rand's depreciation  
.

The Reserve Bank reduced rates by 1.5 percentage points earlier this month, with more cuts expected later this year and early next year.

The number of summonses and judgments would probably peak in November and October before tapering off, Schussler said.

The debt burden was shifting increasingly to the poor, who took out smaller but more loans, he said.

Azar Jammine, the chief economist of Econometrix, said the growth in the number of summonses and judgments was not extraordinary and was a function of high interest rates over the past year.

Overall debt to household income levels had fallen from 60 percent in the 1990s to just below 53 percent in the first quarter of this year. This figure was slightly up from 51 percent in the fourth quarter of last year because of the effect of high rates.

However, there was still a serious need to better educate South Africans on how to handle their finances.

The civil debt statistics also seemed to contradict the sharp decline in the number of insolvencies and voluntary liquidations, which were at record lows, Jammine pointed out.

Jan Bezuidenhout, the director of corporate services at furniture retailer JD Group, said expectations by consumers that the hike in rates last year were temporary caused demand for credit to remain strong.

"We have seen good demand lately, with sales growth running at about 10 percent month on month over the past nine months," he said.