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There are some facts of life that won’t go away because politicians and trade unions don’t like them. One is that households save a net nothing and the government is in debt. So the economy won’t grow unless foreigners and South Africa’s big companies are prepared to invest in the country.
Without funding from these enemies of the people, there will be no money to build factories, roads and ports, and no money to start new ventures that will give jobless people jobs.
It is no good saying: “If they don’t like us they can go elsewhere.” They will. And rating agencies will cut their ratings of South Africa further on fears that the country could become a defaulting debtor.
That means there will be less and less money for social grants, as more and more money is sucked into the interest bill.
Another inconvenient fact is that the opinions of rating agencies matter. The lower the opinion, the more the country has to pay for debt. So there’s little to be gained by saying the rating agencies can go hang themselves, or something similar.
However, many politicians are getting it right, particularly Finance Minister Pravin Gordhan, who has a thankless job. And he is understandably frustrated when rating agencies apparently ignore the country’s relatively healthy debt levels – around 40 percent of gross domestic product (GDP) compared with up to 200 percent in advanced economies.
Moreover, South Africa was able to avoid a banking crisis in 2008/09 when banks in the US and Europe were falling like skittles. This was also due to the foresight and careful supervision of the country’s financial authorities.
The fact is that, whatever the failings of the ANC since the party took over in 1994, financial management has not been one of them. The new government inherited an economy that was sliding into a debt trap and rapidly turned it around.
A few years ago, former finance minister Trevor Manuel had created a small surplus. This achievement, which his enemies within his party held against him, provided a buffer for the bad times. Unlike European governments which had to resort to austerity measures, the South African government could afford to support the economy through the recession.
The sound fiscal management was soon recognised by the rating agencies which, until last year, repeatedly moved the country up the rating scale, from junk bond status into investment territory.
However, these successes were not always acknowledged at home. When it first became clear that Manuel was pulling the country back from the brink of a debt crisis, Tony Leon’s DA produced a mean-spirited response.
The job of the opposition is to constantly challenge the ruling party and expose its defects. But the opposition doesn’t have to ignore the positives. Carping and whingeing is hardly constructive. Who will take a party seriously if it never does anything else?
And carping and whingeing is a habit the DA hasn’t shaken off.
Then there are the critics on the far right who never complained when the old National Party ran up bigger and bigger deficits each year, at a time when financial sanctions ensured the country had no access to global capital markets.
Finally, there are the readers who complain from time to time that we focus on the country’s debt-to-GDP ratio instead of on the absolute debt level, which is over R1 trillion.
This is like saying that a person who is three metres tall should weigh the same as someone two metres high.