{"id":62007,"date":"2024-02-29T16:18:38","date_gmt":"2024-02-29T16:18:38","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running"},"modified":"2024-02-29T16:55:02","modified_gmt":"2024-02-29T16:55:02","slug":"the-worst-case-election-result-that-would-send-investors-running","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running","title":{"rendered":"The worst-case election result that would send investors running"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>The rand is in the doldrums because of anxieties tied to the 2024 elections \u2013 but a dreaded ANC\/EFF coalition could see it crumble if it ever became a reality.<\/p>\n

Following the better-than-expected Budget last week, the rand strengthened slightly to R18.76\/$.<\/p>\n

However, it has since dropped to below R19.00\/$ amid expectations that the US interest rate cycle may be pushed back. It currently sits at R19.23\/$ at the time of writing.<\/p>\n

<\/p>\n

The rand is facing serious pressure, but there may be greater problems on the horizon.<\/p>\n

Many polls in South Africa see the ANC support in the upcoming elections dropping below 50%, with the party needing a coalition partner to help it get a majority.<\/p>\n

One potential coalition partner is the EFF, which would be the worst possible result for the economy and the rand.<\/p>\n

Investec Chief Economist Annabel Bishop said that ANC\/EFF coalition leads the finance group\u2019s severe down case, which sees an increased likelihood of debt default due to excessive state expenditure, while corporates leave the country over the EFF regime, resulting in mass job layoffs.<\/p>\n

Corporate, high-income earners and VAT on their spending are the key taxpayers and fund most of the state\u2019s expenditure.<\/p>\n

This private sector collapse would destroy the banking and financial services sector.<\/p>\n

\u201cForeign appetite for South African debt has already dried up considerably since the end of the 2000s, as South Africa\u2019s borrowings escalated sharply, and its creditworthiness declined. An ANC\/EFF coalition would see even further negative foreign investor sentiment,\u201d Bishop said.<\/p>\n

\u201cThe bulk of financial market investment comes from the Western Hemisphere, and South Africa would lose out on this funding, both to issue new debt as highlighted above and to roll over existing debt.\u201d<\/p>\n

Government expenditure sits at close to R2 trillion, and a massive increase in this under the EFF\u2019s election promises would result in the country going bankrupt, with a debt default. This would deter foreigners from making any investments.<\/p>\n

\u201cEven selling off South Africa\u2019s mining rights to foreigners is unlikely to engender this. South Africa needs trillions to sustain its current expenditure; a few hundred billion would not be enough as envisaged in an EFF sovereign wealth fund,\u201d Bishop said.<\/p>\n

\u201cMarkets worry election promises of the EFF don\u2019t add up fiscally, and even the ANC\u2019s ones may be a stretch, as Fitch highlights.<\/p>\n

Bankrupt South Africa would also not have enough money to pay for social grants \u2013 which help 28 million people in need across the country \u2013 and civil servant wages.<\/p>\n

As per the severe down case, Investec predicts that the rand will drop to R21.50 by the end of 2024 and weaken even further to R22.10 from 2025.<\/p>\n

Luckily not likely<\/p>\n

Despite these fears, Investec\u2019s economic scenarios only assume that there is a 9% that the severe down case will actually occur.<\/p>\n

The base case, which includes 2.0% GDP growth over five years, a modest transition to renewables and a temporary greylisting, has a 45% chance of occurring.<\/p>\n

This would see the rand strengthen to R17.70 by Q4 2024 and stay around that level until the end of 2025.<\/p>\n

Alex Forbes and Bank of America said that they expect the ANC to form a coalition with smaller parties and not the DA or EFF, resulting in the national status quo being largely maintained.<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. The rand is in the doldrums because of anxieties tied to the 2024 elections \u2013 but a dreaded ANC\/EFF coalition could see it crumble if it ever became a reality. Following the better-than-expected Budget last week, the rand strengthened slightly to R18.76\/$. However, it has since dropped to below R19.00\/$ amid expectations […]<\/p>\n","protected":false},"author":84,"featured_media":62006,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-62007","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nThe worst-case election result that would send investors running - South Africa<\/title>\n<meta name=\"description\" content=\"The rand is in the doldrums because of anxieties tied to the 2024 elections \u2013 but a dreaded ANC\/EFF coalition could see ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The worst-case election result that would send investors running\" \/>\n<meta property=\"og:description\" content=\"The rand is in the doldrums because of anxieties tied to the 2024 elections \u2013 but a dreaded ANC\/EFF coalition could see ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-02-29T16:18:38+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-02-29T16:55:02+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/02\/sm_1709213017.002115.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"683\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"The worst-case election result that would send investors running\",\"datePublished\":\"2024-02-29T16:18:38+00:00\",\"dateModified\":\"2024-02-29T16:55:02+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running\"},\"wordCount\":568,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/02\/sm_1709213017.002115.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/the-worst-case-election-result-that-would-send-investors-running\",\"name\":\"The worst-case election result that would send investors running - 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