Flagging On The Good Fight In South Africa
August 10, 1996
The South African rand has lost value due to international bankers' doubts about President Nelson Mandela's ability to carry through on his commitment to economic reform. In June he announced a program of extensive privatization, deregulation of the labor market, wage restraints and a cut in the budget deficit to 4 percent of national output in 1997 from a target of 5.1 percent this year.
- In a vote of confidence on Mandela's restrained economic policies, the rand rose steadily from last year through February -- from about 23.5 cents to 27 cents against the U.S. dollar.
- But as of last Friday, it traded in New York at about 22.1 cents.
- While one-third of the population is unemployed and violent crime is rising sharply, the Mandela government is reported to be having difficulty convincing supporters and investors of its commitment to reforms.
- In March, a politically nonaligned former bank chairman was replaced as finance minister by a former communist -- who now sings the delights of capitalism.
Although Mandela tried to soothe investors on a trip to the U.S. in April, the effect was reported to be negative -- given his lack of background in finance.
Predominantly black trade unions are fighting Mandela's economic programs, which aim at creating 400,000 new jobs and 100,000 new houses by the end of the century through privatization and other reforms.
Source: Paul Lewis, "Economic Worry on South Africa Again Hits Rand," New York Times, August 10, 1996.
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