Greylisting could lead to currency degradation, to inflation, and to trade deficits. Greylisting could also lead to difficulty in obtaining additional financing from global banks and bodies like the International Monetary Fund (IMF), the World Bank and the European Bank for Construction and Development.
It has historically led to substantial decline in capital inflows and in foreign direct investment, with subsequent stagnating economy and job losses. This will likely be the case in South Africa in an economy which is already stagnating, and where further job losses cannot be afforded.
Written by Michael Honoball, Head of Tax & Exchange Control at Werksmans Attorneys
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