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Disinformation or just ignorance?

06 January 2014, 11:54
Yesterday, I had a discussion with 3 gentlemen on the News24 website ( Luzuko Mtoyi , Jones Phu-t Lekgoara and Elimu )

These 3 gentlemen were adamant that when South Africa was handed over to the ANC in 1994 it was a bankrupt state and that we were still paying of those debts today. The more I tried to explain that it was simply not true, the less they believed me.

So, to settle this once and for all, I am going to explain why I believe that it is not true and then I would appreciate it if these 3 gentlemen (and everyone else who wants to) would tell me where I made the mistakes in my calculations or where I missed the boat completely. Please supply reliable evidence for this as I will try to do the same.

Please note that I do not endorse the apartheid state as I think it was a horrendous abuse of human rights which should never have happened. All I am saying is that we owe it to ourselves to be truthfull, honest and understand the reality of the situation. The fact is that in rand terms South Africa's External debt has grown from R 94 billion in 1994 when we were supposed to be bankrupt, to 14.6 times that namely R1375 billion. If we were bankrupt  back then, we are now super bankrupt.

Ok, to start off, here are some external debt figures. External debt is the component of a country's overall debt that is owned by creditors outside of the country.

(I have rounded the figures to the nearest billion)

External Debt
1994: $26 Billion = R 94 billion
2013: $131 Billion = R1375 billion
Ratio: 1:14.6 (Rand terms)

1994: $130 billion = R 468 billion
2013: $384.31 = R 4032 billion
Ratio: 1:8.6 (Rand terms)

The external debt has ballooned from R 94 billion in 1994 to R 1375 billion today.
From the above we can see that the external debt has grown 14.6 times from what it was 1994 while on the income side our GDP has grown only 8.6 times to what it was.

Furthermore, mostly all rating agencies in the world has downgraded us and the above is one of the reasons

I would like for the 3 gentlemen to explain how having debt 14.6 times higher and income only 8.6 times higher is better. I believe that South Africa is much closer to bankruptcy now than in 1994

Please feel free to tell me where I am wrong.

Below you can find references and more information to where I got the information from.
GDP: 1994: $130 billion

GDP: 1994: $384.31

South Africa's international debt back to US$25.8 billion at the end of 1993..

Exchange rates
In 1994 the exchange rate was R3.60 to the $
In 2014 the exchange rate is R10.50 to the $
I have used R10.50 to the $ even though it is listed as $10.68 on the News24 website

A host of local and international events influenced the currency after that, most notably the 1994 democratic election which saw it weaken to over R 3.60 to the dollar...

The SA Reserve Bank website sheds further light on the subject and it doesn’t look good. A little line in the Economic and Financial data page says that South Africa’s external debt amounted to $131 555 000 000 (that’s in US dollars) in the first quarter of 2013. So how does this amount square with the “level of debt” discussed above?,-Just-Borrow.html

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