PETER BRUCE: Why these are frightening times for SA
'Economic growth is the only effective way Ramaphosa can anchor his leadership. Instead, he is treading water and we are on the edge'
EXTRACT
It's grim. The government borrows up to R20-billion a month to pay for schools, hospitals, welfare and, since former president Jacob Zuma doubled the public service, salaries as well. It is a formidable task and the bond sell-off means the National Treasury has to offer increasingly higher interest rates to attract buyers. Earlier this year it calculated our interest payments alone at R214-billion a year by 2020-21. That is more than R850-million every working day.
These are frightening times for our country. We are caught in the middle of an emerging-markets crisis as the dollar strengthens and plummeting US unemployment pushes up interest rates there. Meanwhile, President Donald Trump's trade war with practically the entire world has only just begun. It could have a devastating effect on small but open economies like ours. The rand and the stock market, like equities and emerging-market currencies all over the world, have taken a sickening dive. Foreign investors, on whom we depend to supplement our poor savings rate, have been selling South African debt - government bonds - at such a rate (R34.7-billion since January is the official number but probably an understatement), that the drain outpaces the sell-off after the 2008 financial crisis.It's grim. The government borrows up to R20-billion a month to pay for schools, hospitals, welfare and, since former president Jacob Zuma doubled the public service, salaries as well. It is a formidable t...
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