Mandela’s Macroeconomic Policy Legacy Persists

SOUTH AFRICA - In Brief 09 Dec 2013 by Iraj Abedian

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The passing of new South Africa’s founding president, Nelson Mandela, affectionately known as Madiba, is yet another remarkable moment in the country’s young democratic dispensation. Once again, the nation has arisen to defy all predictions of chaos and negativity-instead unifying across all racial, political, tribal, religious and political diversity to pay a much deserved “last respect” to a leader who dedicated his entire life to justice and democracy, ultimately overcoming all domestic and global obstacles on the way to bringing about a democratic political order in the country. Mandela’s legacy is hard to summarize in words and sound bites. South Africa’s democratic order in 1994 was born in the midst of the economic ruins left behind by the apartheid regime. The economy’s growth had fallen to near zero, the fiscal conditions at near bankruptcy, a balance of payments in a state of structural deficit, a currency on depreciating path with an accumulated negative foreign reserves of over US$20 billion. South Africa had been under sanctions by the global capital markets for nearly 15 years and was not fit to be assessed for global credit rating. Both domestic and international fixed investment had dried up. Tax morality had reached an all-time low. Against such perilous state of macroeconomic instability, a range of macroeconomic and institutional reforms were introduced in rapid succession over the 1995-1999 period. The policy reforms were particularly significant, not only because they were the pre-requisites for macroeconomic stabilization, but also were implemented under the Presidency of Mandela who was expected to be populist and even socialist. Contrary to all ...