Sanctioning Apartheid - KORA

debt outside the standstill, South Africa d be faced with mnsiddle
capital outflow. Minisber of Finance Barend du Pleir;
admitted, "AD South AErirrurs must realize that the oountry faces
tough time in the next four years in which we have to pay back
$8 billion in foreign debt" He also said that %uth Africa would
have to adopt strid internal policies to hit the growth of the
economy.
No information has been provided on the intmst rate to be
paid One British banker told the New Ymk Tima h t "the rates
are relatidy high . . . . They are penalty rates of interesta The
same banker noted that when banks renegotiate terms of Ioans to
Latin American countries, they often reduce the rate paid.
ExifLorurs
The new a-ent a h has a pmvision whereby banks can
remove their debt from the standstill by conver~ing their debt fo
long tam loans. Under this provision, banks will get no principal
payments for 7 1/2 years and then will be paid back in
equal six month payments over the following 2 1 /2 years. A
similar clause &ling in ihe Second Interim Arrangement was
exercised by Citimrp,. South Africa is encouraging banks to take
this option as it eases the immediate payment problems. Quis
Stals remarked: "We already faced substantid liabilities up tc~
1997 and it was prudent to avoid more pressure during this
period The repayment of these loans will be bunched in three
years beginrung in 1998."
It is difficult to determine how xtany banks have exercised
the exit clause, but US bank loans with a maturity of over five
yeats have in& from S7 million in March 1987 to $747
millian in June 1989. This implies that at least $590 million has
been crmverted under the Second Interim Arrangement to longterm
E m .
Citicorp and Manufa- Ifanover are two prominent
banks which have converted some of their outstanding lwns, In
Febnrary 1989, Citicorp exercised one of the exit clauses by
converting !$660 mdIim in short-term loans covered by the
Seeond Interim Arrangement into a len year loan Citiarp will
receive no repayment of principal until with full payment
by 1W- Citioorp was critkhd for this action bw it