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This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

From 19 March 1989, Journal of Commerce, Tony Koenderman, "South Africa: One of Few Repaying Debt"

International pariah it may be, beset by trade sanctions and disinvestment, but South Africa is one of only a handful of developing countries that is repaying its foreign debt.

The size of the debt and the internationally perceived inability to repay it (because of deteriorating internal political conditions) were behind the urrency crisis of August 1985.

That was when, fearing the rapid collapse of the system, international banks led by Chase Manhattan refused to roll over loans to private-sector borrowers.

The reluctance spurred a capital flight that quickly turned into panic reflected in a crumbling currency. The rand plunged from 51 U.S. cents to 35 cents in five weeks. But in 1986 agreement was reached with international banks on a scheduled repayment of $ 24.3 billion of outstanding foreign debt.

By the end of 1988, according to provisional Reserve Bank (central bank) estimates, South Africa had reduced its foreign debt to $ 21.5 billion. Repayments have totaled $ 5 billion in the last two years, but a large (officially undisclosed) portion of the debt is denominated in German marks, Swiss francs, sterling and other currencies. As the dollar has lost ground against those currencies, the dollar value of such debt has risen, even after repayments.

Nevertheless, economists argue that South Africa has repaid so much debt over the last four years that it would today be regarded as "under-borrowed" were it not for the crucial political concerns that loom above everything.

The ratio of total debt to gross exports of goods and services has declined from 171 percent in 1984 to 85 percent in 1988. According to the International Monetary Fund, the comparable ratio for so-called Western Hemisphere developing countries worsened from 273 percent in 1984 to 322 percent in 1988.

As Reserve Bank Governor Gerhard de Kock observed: "Foreign bankers no longer have any worries about outstanding loans to South Africa." Indeed, he believes, some of them would be perfectly willing to extend new loans - were it not for pressures by governments, the United Nations and anti-apartheid lobbies.

If foreign bankers are unworried, however, the same cannot be said of local economists.

Debt repayments scheduled in the next three years exceed $ 4.7 billion - probably more than the balance of payments will be able to accommodate.

Tough measures to restrict imports have been implemented, and there's a boom in exports of minerals and agricultural produce. The price of the main export commodity - gold - is in a tailspin.

Even with imports on a tight rein, chances are that foreign debt repayments will have to be rescheduled in 1991.

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.