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South African official says nation can't bail out Eurozone

October 13, 2011 |  8:23 am

Gill Marcus
REPORTING FROM JOHANNESBURG, SOUTH AFRICA -- It would have sent a neat message to the world: an African country helping to bail out the Eurozone from its debt crisis, in a stunning reversal of the stereotype of the cap-in-hand continent.

The idea had been discussed in recent weeks, following a proposal that a group of emerging market countries known as BRICS (Brazil, Russia, India, China and South Africa) step in to help prevent a Eurozone meltdown, given the catastrophic contagion such an event could bring.

There's just one problem with South Africa joining a rescue: It might be the richest country south of the Sahara, but with reserves of just $50 billion, it can't afford it.

"We can't solve Spain or Italy. It is their job," Reserve Bank Gov. Gill Marcus was quoted as saying in Thursday's Business Day newspaper.

South Africa, which even the country's finance minister, Pravin Gordhan, recently called "Mickey Mouse" compared to the other BRICS economies, was invited to join the group by China, its biggest trade partner.

Marcus said Wednesday the Eurozone bailout needed a coherent strategy from the Group of 20 major advanced and emerging economies.

"I think you can’t just have something which says this is something which we can do," Marcus said. "Our reserves are nothing like China’s. China’s are in the trillions. We have $50 billion."

Last month, Gordhan said South Africa might have to increase its contribution to the International Monetary Fund by a couple hundred million dollars to help protect Europe, if the debt crisis spread to Spain and Italy.

"There was a recognition that we are all in this together. Even the BRICS countries can't set themselves apart from the solution," he told journalists in Pretoria two weeks ago.

South Africa's volatile rand, seen as overvalued by analysts earlier this year at about 6.5 rands to the dollar, slid sharply in recent weeks to around 8 to the dollar.

Marcus told the parliamentary finance committee the world faced slow growth for an extended period. South Africa faced a difficult and dangerous environment in coming months, she warned.


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-- Robyn Dixon

Photo: South African Reserve Bank Gov. Gill Marcus addresses a news conference in September in Pretoria. Credit: Jon Hrusa / EPA