Institute against writing off apartheid debt

The South African Institute of Race Relations says that it is misleading to label all the government’s debt as “apartheid debt” and that there is no real case for calls being made for the debt to be written off or regarded as “odious.”

According to the institute’s chief executive, John Kane-Berman, one of the reasons the debt is so large is that the previous government “actually tried in later years to reduce the inequalities its policies had helped create.”

For example, he said, state spending on African education doubled as a proportion of the total, while that on whites halved. Similarly, racial inequality in social pensions had been eliminated by the time Nelson Mandela became president in 1994.

Kane-Berman noted that in the 10 years before the 1994 election, government debt as a proportion of GDP rose from 32 percent to 49 percent.

“Part of the reason was the increase in social spending (education, health, welfare, and housing): from 31 percent of the budget in the mid-1980s to more than 40 percent by the early 1990s,” he said in a statement Friday.

“Government revenues were insufficient to finance all its expenditure, so the budget deficit rose, adding to government debt,” he added. “The fact that this spending was effected through racially segregated structures such as homelands and the tricameral parliament does not in itself make it odious. What counts is what it was spent on.”

Kane-Berman said the African National Congress government is right to reject demands to have the foreign debt written off as odious, and described its arguments as “compelling.”

“Firstly, and contrary to attempts to characterise the debt as ‘odious’, most current foreign debt was built up after the change of government and constitution in 1994,” he said.

“Secondly, although South Africa’s debt is huge, foreign debt is less than 5 percent. Our major problem is internal debt, which cannot be written off as it is in effect owed to individuals who have invested their savings in such things as government bonds,” he added.

Panafrican News Agency, March 6, 1999

Categories: Africa, Odious Debts, South Africa

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