Debt is a dirty word in our public discourse, specifically as it relates to public finances. The country is borrowing too much and the debt-to-GDP ratio is simply unsustainable, or so the ongoing conversation goes.
The main dread factor is the country being booted out of the Citigroup World Bond Index. The country has been on that index for nearly seven years. It will be officially seven years in October, as South Africa joined that exclusive club in 2012. The main factors cited for inclusion were “size, credit quality and lack of barriers to entry”, according to a Citi press statement released around that time, congratulating South Africa on its inclusion.
The standard gauge that is used to measure this is the debt-to-GDP ratio. There is no doubt that the current economic environment has given rise to untenable conditions for most South Africans. However, that is not the focus here. The cut and thrust of this piece is to locate where the panic stems from about the country’s debt and if it is, indeed, warranted.
French economist Marc Flandreau focuses on digging deep into the historical record of sovereign debt and defaults, stretching back to the antecedents of the bond market.
OMG - actually discussing whether South Africa is a failed state or a miserably failed state? How about '****-up'? Would that cover things adequately?
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