SA at significant risk of financial crisis, warns economist
An economist says
there's little doubt that South Africa is heading into a financial crisis.
It's despite
assurances to the contrary by ANC president Cyril Ramaphosa.
Ramaphosa told the party's national executive committee on Monday night that the country is not running out of money.
The president said, at the same time, the ANC supports efforts for fiscal discipline to reign in rising debt levels and revenue shortfalls.
It's amid warnings by the Treasury that the government will have to tighten its belt.
Efficient Group economist Dawie Roodt says the country is running out of options and cannot simply respond to the crisis by printing more money.
"Zimbabwe is a good example. They created so much of their own money - the Zimbabwean dollar, but their money became basically worthless.
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"So that is exactly the situation in South Africa as well. We can create more money, and the Reserve Bank can make more money, but the day will come when people will say, 'Listen, there is too much of this money going around. I don't want this money anymore,' the money will lose its value, and we call that inflation.
"If we keep on going the way that we have been going, especially on the fiscal accounts, then the day is going to come that inflation is going to become a significant problem in South Africa."
