Outrageous Prediction 3: South Africa electrocuted by ESKOM debt

Kay Van-Petersen mentions that; the South African government announcement late this year that in order to continue to bail out troubled utility ESKOM and keep the nation’s lights on, the budget next year is projected to balloon to its worst level over a decade at 6.5% of GDP, a sharp deterioration after the government managed to stabilise finances at a near-constant -4% of GDP for the last few years. Late 2019 saw some of the most generous credit conditions for emerging markets in history and the market somehow managed to absorb this news without jettisoning the rand to new lows for the year.

"The ESKOM fiasco may be the straw that will break the back of creditors’ willingness to continue funding a country that hasn’t had its financial or governance house in order for decades. Other uncreditworthy EMs will
be drawn into the abyss as well in 2020, with the most differentiated performance across EM economies in years. USDZAR rises from 15 to 20 as the country teeters toward default"

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