Brazil’s finance minister has been making noises about the BRIC nations bailing out Europe by buying their bonds, which puts South Africa in a bit of a bind - we’re not rich enough to take on that kind of risk. Wasn’t the size of our economy always the reason South Africa would join the bloc anyway? By SIPHO HLONGWANE.
South Africa is undecided on buying euro bonds and is not in the same position as its partners in the BRICS bloc of emerging market powers who can afford to use their foreign exchange reserves, said South Africa’ finance minister Pravin Gordhan on Wednesday. “We don’t have any position on that yet until we understand what’s going on and what’s in our best interest at this point in time,” he said to journalists.
He was responding to the news that Brazilian finance minister Guido Mantega said BRICS (Brazil, Russia, India, China, South Africa) finance ministers were in talks to increase each country’s European bond holdings to help ease their financial woes.
Gordhan contradicted this saying any decision to buy European bonds would be taken by each country on an individual basis. He also pointed out that China has $3.2 trillion in reserve and SA only has $55 billion in reserves, making us a minnow in the sea of international bond markets.
In what could be a sign of shifting global power, Italy this week began courting China to either buy up its bonds or invest in its companies in an attempt to stave off a Greek-style financial crisis. DM
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