Trotting towards a bail-out: South Africa gets a rating downgrade

Posted: December 7, 2015 in economy
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Trotting towards a bail-out


Mismanagement and magical thinking are driving the rainbow nation into a debt crisis

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“OUR sovereignty in South Africa was incredibly hard won, steeped in blood and pain,” said Trevor Manuel, the country’s former finance minister, recalling the debt crisis he had inherited at the end of apartheid in 1994. Faced with a contracting economy, rising public debt and spiralling debt-service costs, the new democracy seemed to be heading towards an IMF bail-out that would have entailed it handing over control of its economy to international creditors. Instead, as Mr Manuel recounted in an interview with the Daily Maverick, a news website, in 2014 on the eve of his retirement from politics, South Africa cut state spending to ensure “we weren’t going to become a client state of anybody.”

Two decades later the country is again moving towards the edge of an economic precipice. Public debt is rising fast, as are the costs of servicing it. The economy has …

via Economic Crisis


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