A default on their debt by South Africa’s State-Owned Enterprises would be harmful to the banking sector, but would not derail it.

This was the view of the South African Reserve Bank based on analyses in the latest Financial Stability Review. South African banks held debt of around R129 billion, while foreign banks were owned some R104 billion.

However, the South African banking and financial sector had some R5.5 billion in assets, meaning that a default would be disruptive, but not fatal.

Reserve Bank governor Lesetja Kganyago added that the growth of SOE debt was a worldwide problem and that South Africa was not alone in this regard.

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