Will downgrades intensify or reverse Treasury’s neo-liberal ideology?
Further downgrades could cause a "run on the bank" as in 1985 — or generate a long-overdue era of radical economic transformation
As SA digests the news of S&P Global Ratings’ April 3 downgrade of state debt to junk status following President Jacob Zuma’s March 30 Cabinet reshuffle, two other credit ratings agencies will soon hold forth. Even if these agencies’ biases and competence should be questioned, further junk ratings could well cause a "run on the bank" similar to 1985 when PW Botha’s crazed Rubicon speech caused a $13bn default. The foreign debt to GDP ratio hit 40% — today it is nearly 50% — and compelled Botha to impose exchange controls (the "finrand"). In contrast, might the current crisis generate a long-overdue era of redistribution, racial justice and radical economic transformation? This was the promise of new Finance Minister Malusi Gigaba last Saturday, April Fool’s Day. ‘Zupta’ white elephant breeding Similar false promises of transformative infrastructure left society disappointed during Gigaba’s 2010-14 role as Minister of Public Enterprises. The mega-project mania included: • Eskom’s cor...
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