It’s no secret that South Africa is facing a potential economic crisis. Debt has been rising unsustainably and economic growth is too low to keep up with our debt obligations. This means that the prospect of an IMF bailout is becoming ever-more likely. While South Africans are – rightly – afraid of this prospect, a debt crisis doesn’t have to mean the end of the line. The experience of other indebted emerging markets around the world can offer some important lessons for SA. In this episode, featuring content from Bloomberg’s Odd Lots podcast, I take a look at what we can learn from the experience of other nations that have faced economic headwinds similar to ours.  – Felicity Duncan
South Africa has a debt problem. Over the last few years, the country’s debt-to-GDP ratio has risen to over 60% on the back of enormous debt piles at underperforming state-owned enterprises like Eskom and SAA. Government has been forced to borrow in international markets to finance its day-to-day spending, and interest payments now account for a sizeable chunk of the annual budget.
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Like many of its emerging market peers, SA is looking down the barrel of a sovereign debt crisis, which is what we call it when a country can’t pay its debts and can’t borrow more to keep paying them. If that happens, an IMF bailout will beckon. This is bad news for everyday South Africans. But SA is not the only, nor the first, country to find itself in this pickle. Around the world, other emerging markets have felt the bite of a debt crisis and come out the other side.
In this podcast, we share content from Bloomberg’s Odd Lots podcast, which takes a look at crises in other emerging markets and how they were managed. As we face the prospect of debt downgrades and a credit crunch, SA can take some sobering lessons from their experience.
