SA might have to pay back double the World Bank loan
24 January 2022 - 16:04
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Many countries, Argentina for example, have got themselves into trouble this way. The money has to be paid back in dollars and the exchange rate between the borrower's currency and the dollar invariably gets worse.
When SA borrows $11bn now it translates into about R180bn. The amount that has to be paid back can be double this if the exchange rate goes against us, which it usually does.
Far better to try to raise the money in rand on the local market, or do without it if need be.
Jeremy Gordon Sea Point
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: The road to ruin
SA might have to pay back double the World Bank loan
Taking loans in US dollars is starting on the road to ruin (“World Bank loan rewards SA for reform ‘breakthrough’”, January 24).
Many countries, Argentina for example, have got themselves into trouble this way. The money has to be paid back in dollars and the exchange rate between the borrower's currency and the dollar invariably gets worse.
When SA borrows $11bn now it translates into about R180bn. The amount that has to be paid back can be double this if the exchange rate goes against us, which it usually does.
Far better to try to raise the money in rand on the local market, or do without it if need be.
Jeremy Gordon
Sea Point
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
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