The headline to Neva Makgetla’s article (Addiction to hot money retards growth, fuels inequality, September 12) is the wrong way round.
Because we have been running a large current account deficit for a long time and do not attract foreign direct investment (FDI), we are reliant on short-term foreign capital.
Without it, we would have to suppress domestic spending through tighter monetary policy, sharp tax hikes and cuts in government spending in order to bring about a current account surplus. These actions would trigger a much longer and deeper recession than the one we endured around the end of 2016.
Our concern should not be the short-term flows as such, but the political and economic policy factors that have created a hostile environment for FDI and fixed investment by local businesses alike.