Johannesburg - If the International Monetary Fund (IMF) raises its funds to help countries in
the European debt crisis, South Africa would need to contribute a couple of
hundred million dollars, Finance Minister
Pravin Gordhan said on Wednesday.
Gordhan said all countries would have to make a contribution to contain the European crisis.
"There was a recognition that we are all in this
together... even the Brics [Brazil, Russia, India, China, South Africa
group of economies] countries can't set themselves apart from the
solution," he said.
He was briefing local media following a meeting of finance ministers in Washington DC, US, last week which he chaired. The meeting was held at the International Monetary
Fund's (IMF) headquarters during the annual meetings of the World Bank
Group and the IMF.
It came at a time when a debt crisis in Greece threatened the survival of the eurozone, and could spread to Spain and Italy.
Gordhan said there was recognition at the meeting that
no one wanted the contagion from the eurozone to spread and damage other
economies around the world.
He said the source of the world's economic optimism
came from the developing markets where there was growth, and this should
not be damaged in any way. It was key that Europe should take the lead and give effect to the bail-out packages it had decided on, on July 21, he said.
However, all countries, possibly through the IMF,
needed to ensure that international agencies had sufficient "firepower"
to resolve the crisis, he said.
This could mean increasing the $400bn that the
IMF now had, to a much higher amount so that it could play a more active
role in resolving the crisis.
"Then each of the members of the IMF... will have to
make a contribution to that... for us (South Africa) that means a couple
of hundred million dollars," Gordhan said.
"Some of the calculations floating around in
Washington... [are] that if this crisis spreads to Italy and Spain,
you'd need over $2 trillion to be able to intervene within that
environment."
Ripple effect
Gordhan said the meeting recognised a very urgent need to contain the ripples of the European crisis. There was also a recognition that "we are living in a dangerous world".
South Africa needed to do enough to save current jobs and prevent further job losses. "We're working on this as government," he said.
Gordhan said manufacturing jobs in South Africa could be affected by what was happening in the eurozone.
The eurozone economy was expected to grow 1.6 percent
in 2011 and contract to 1.1 percent in 2012, leading to diminished
demand, he said.
South Africa's safeguard would be trade with the East, particularly China, and the rest of Africa. "Our businesses need to do more business with Africa, where there are still substantial levels of growth," Gordhan said.South Africa is scratching its head about how to stabilise an unhelpfully
volatile rand, Gordhan also said.
He added that he was not sure how the country will manage fiscal credibility
and grow the economy at the same time.