South Africa:

Relationship With Western Financial Institutions

NSIAD-90-189: Published: Jun 7, 1990. Publicly Released: Jul 9, 1990.

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Pursuant to a congressional request, GAO analyzed: (1) South Africa's debt; (2) trade credits to South Africa and the economic impact on South Africa of denying trade credits; and (3) the implications of excluding South Africa from the American Depositary Receipt (ADR) system.

GAO found that: (1) South Africa has been virtually locked out of world capital markets and is unable to get new medium- and long-term loans to repay the principal on existing loans; (2) South Africa managed to reduce its large payments due in 1990; (3) even with the improved climate for political negotiations, international investors are reluctant to make medium- and long-term loans to or investments in South Africa; (4) South Africa got credits associated with trade to partially compensate for the lack of new lending, but there was small credit inflow compared to large outflows of total debt repayment; (5) the United States provides only short-term credits associated with trade to South Africa; (6) it was unclear which countries were providing most medium- to long-term credits to South Africa; (7) the effect on South Africa of a unilateral U.S. ban would be limited, though it might reduce the volume and value of U.S. exports to South Africa; and (8) if South Africa were excluded from the ADR system, there would be little effect on South Africa's economy.

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