The axing of finance minister Pravin Gordhan, followed by SA’s swift downgrade to junk status by ratings agencies S&P and Fitch, have many running scared, wondering whether President Jacob Zuma has set the country on an irrevocable path towards a debt crisis. South Africans who lived through the debt standstill triggered by PW Botha’s failure to cross the Rubicon in 1985 can see the similarities in the way the economy is being held hostage to the mad power play of an obdurate president. But other than that there are no similarities between then and now, say former SA Reserve Bank and national treasury officials who played a key role in events in 1985. In fact, government never defaulted on its debt and it was not the bond market that disciplined the president. Rather, the debt crisis was caused by international banks, starting with Chase Manhattan in July 1985, pulling the plug on private SA companies’ trade facilities. Government couldn’t borrow on international markets because of ...

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