'Don't owe, won't pay!': A critical analysis of the Jubilee SA position on South African government debt

Abstract

Jubilee 2000 (SA) supports the cancellation of South African national government (and other) debt on the grounds that it is odious debt from the apartheid years. The organisation has called for foreign creditors to cancel the debt voluntarily and has threatened to call for debt repudiation if such cancellation is not forthcoming. However, unlike voluntary debt cancellation, debt repudiation would probably have serious consequences for investment and growth. Furthermore, as most government debt has accumulated after the end of apartheid, and as most is domestic and marketable, the moral argument for repudiation is problematic. Jubilee 2000 (SA) is also calling for the government pension scheme (which owns a large proportion of the domestic government debt) to be restructured. Contributions to the pension fund may be excessive (as argued by Jubilee 2000), but the case is not clear. South Africa should publish a dual set of accounts in line with how other countries report their liabilities so as not to overstate the deficit in the eyes of investors.