Junk status is a scary reality

2017-04-20 06:00

There is nothing good about junk status, so stop believing the lies told by politicians.

Junk status simply means our economy is under pressure. It can take up to seven years to get out of this mess.

The poor and the middle class will be the most affected. It will now cost us more to buy basic groceries. Those who have loans, credit accounts and bonds will pay higher interest rates.

VAT might also increase to 15%. The hot issue of free education will remain a pipe dream because government will not be able to borrow more to cover our annual budget shortfall. Every year South Africa borrows about R200 billion abroad to ensure it delivers services. This means we can no longer borrow money and if we do, we’ll pay more interest.

Imported goods will be more expensive. We might have to cut back social grants and government spending.

We must remember that we are in this crisis because of President Jacob Zuma and the ANC’s factional politics. Businesses will downsize, increasing the high youth unemployment rate. If you want to understand what junk status means, just go to Zimbabwe.

Sidwell Tshingilane

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