“We are welcoming the junk status. When the economy rises again, it will be held by us,” Collen Maine, ANC Youth League President, told supporters in front of Luthuli House on Friday, 7 April 2017.
We can make fun of Mr Maine seven days a week, but does he know what he is saying? And who is the “us” he is talking about?
Because of junk status the SA government will no longer be able to borrow money from reputable institutions that offer low interest rate repayments. Much like being listed on a credit bureau, these sources will decline further loan applications.
However, there are many shady companies and countries that will be willing to lend us funds, but these loans are often coupled with extremely high interest rates. They also require collateral in terms of things like land, mines, natural resources, etc. Should we default on repayments, they will lay claim to the land, mines or resources and if we want to continue borrowing (like we always do), the government will give our land and mines to these companies or countries.
Ever wondered how much land and how many mines Zimbabwe still really own?
-Johan, Louis Trichardt