Page 126 - SARB: 100-Year Journey

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Anti-apartheid demonstrations in Soweto, June 1980. /William Campbell/Sygma via Getty Images
Apartheid-related economic crises: a case study of the debt standstill dilemma
The apartheid era had no shortage of economic crises, but one in particular stood out: the standstill on foreign debt unilaterally declared by the apartheid regime in the mid-1980s. The previous segment covered South Africa’s political and economic histories from 1960 to 1989 in broad strokes while locating the SARB’s responses within the socio-economic context of that period. The focus will now fall on the political circumstances that led to the debt standstill and the SARB’s role therein.
As the political temperature rose through the 1980s in South Africa’s predominantly black townships, which were mostly situated on the fringes of the country’s city centres and deemed urban slums, and calls for freedom grew louder, international pressure intensified against the apartheid authorities through boycotts, sanctions, divestments and capital flight. Capital flight posed all manner of policy and administrative headaches for the monetary authorities. In particular, this caused distress to South Africa’s balance of payments outlook with reference to the country’s capital account.
The eyes of the world were trained on South Africa, with demands for reform and a swift end to apartheid being made on President P W Botha’s government. Botha, through a series of costly political gaffes, dug in and his hubris deepened. The condemnation of the international community did little to dissuade Botha about the demerits and unsustainability of the apartheid system. On the contrary, this only served to embolden Botha.
On 15 August 1985, President Botha’s convictions about the soundness of apartheid materialised in a defiance that reached new unimaginable heights when he delivered his notorious Rubicon speech.
Former SARB officials Dr Chris Stals, James Cross, Prof. Jannie Rossouw, Dr Ernie van der Merwe and Lambertus ‘Bertus’ van Zyl remember that time well for the difficulties it posed for the central bank. All are in agreement about how tough matters became for the monetary authorities in the aftermath of the August 1985 speech. In addition to the insights from the erstwhile Bank officials, mention goes to the University of Stellenbosch Library for sharing its special collection material on the South African debt standstill crisis of 1985–86.
The special collection contains, among other documents, correspondence from Dr Fritz Leutwiler, who mediated the standstill standoff between South African authorities and about 30 foreign banks with assistance from the Price Waterhouse