BACKS TO THE WALL IN PRETORIA
With their backs to the wall, South Africa's debt negotiators now find creditor banks inflexible. The result may be another moratorium next April.
When American banks abruptly choked off loans to South Africa 18 months ago, plunging Pretoria into the worst financial crisis in its history, finance ministry and central bank officials hurriedly launched a campaign to avoid being lumped into the same category as debt-ridden Third World nations.
Shaken by the speed with which European banks moved to follow the lead of Chase Manhattan, and stung by the damage to his reputation, Reserve Bank governor Gerhard de Kock denied that South Africa was overborrowed. "No country in the world can suddenly be expected to pay back all its debt at once,' he said.
No one disputed South Africa's previously unblemished credit record. Nor did anyone deny that the move to isolate the country from international credit markets was politically inspired. "The banks have accomplished in two weeks what politicians haven't done in years,' Chris Ball, managing director of Barclays National Bank in South Africa, said at the time.
Taking his cue from more experienced officials, the Finance Minister, Barend du Plessis, slapped a partial freeze on foreign debt repayments, labelling the moratorium a "standstill' and exempting about $10 billon in government-guaranteed loans and trade credits out of the total $24 billion debt from the repayment prohibition.