Page 127 - SARB: 100-Year Journey

Group; the Standstill Co-ordinating Committee’s proposals to the foreign banks; and a letter written by businessman Anton Rupert to Botha about the follies of apartheid. Leutwiler was the former President of the Swiss National Bank and the erstwhile Chairman of the Bank for International Settlements.
Stals, on appointment by the Minister of Finance, chaired the Standstill Co-ordinating Committee, and SARB Deputy Governor Dr C J de Swardt was Deputy Chair. The committee’s task was to deliver an assessment of the South African economy, in conjunction with the SARB, and its future prospects, and to devise a credible plan for the repayment of debt owed to the foreign banks. This analysis of the economy included South West Africa (now Namibia) and the ‘four independent states’: the Ciskei, Transkei, Venda and Bophuthatswana (since dissolved and incorporated into the ‘new’ South Africa).
At the time, Stals was the Deputy Governor responsible for the Bank’s foreign operations. This was shortly before his secondment to National Treasury (then referred to as the Department of Finance).
Stals, who began his career at the SARB in 1955, recalls that: “The speech made by President Botha ... broke the camel’s back. On 1 September 1985, two weeks after the release of the speech, we had to declare a debt standstill ... South Africa could no longer meet all its foreign obligations, and could no longer repay its maturing foreign loans.”
Gidlow (1995, p 213) describes the effects of the events precipitated by the speech on the economy as “a traumatic shock”. Moreover, “South Africa’s financial relations with the rest of the world were severely affected for the rest of the decade.” Through a state proclamation issued in 1985, between 28 August and 1 September, the foreign exchange market was closed. “Banks incorporated in South Africa were not allowed to conduct any foreign exchange transactions.”
Cross explained the situation thus: “What triggered that was there were a number of large banking lines which were drawn off the country, all of a sudden, in a short space of time. It started with the Givens Bank. They withdrew a big line of credit. Others followed.”
“It was a difficult time for monetary policy and fiscal policy, but specifically monetary policy. A hugely difficult time. The world was volatile, too,” recollected Cross.
“[One] had to negotiate with creditors because what happened was that corporations and individuals in South Africa who owed money had borrowed it offshore for various reasons. For trade and other reasons. They owed the money to creditors offshore and they were unable to repay them, even though they had the rand to do so because there was insufficient foreign exchange,” Cross noted.
Roger Gidlow. /SARB
James Cross. /SARB
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