SA a very minor player in Greek tragedy

The Greek debacle has reached its heights, certainly threatening the fiscal foundation on which the Eurozone is based, but fortunately having minimal adverse impact on SA trade or other bi-national business. According to Luke Doig, senior economist at Credit Guarantee Insurance Corporation (CGIC), SA exposure to Greece is limited. “Greece is a pretty small economy anyway. And I can’t see why it’s causing such a fuss. Unless it’s because the integrity of the Euro area is at stake.” And the illustrative figures he produced to make his case on lack of SA impact are the trade numbers for calendar 2014. SA exports to Greece were R504 million, while imports to SA totalled R571m – coming to the not so grand total of only R1.075 billion, a mere pebble in the great wash of SA trade. “The only South Africans who may be affected, and not necessarily adversely, are those who plan to laze on the likes of Mykonos,” said Doig, implying that, convert your holiday boodle into a bundle of US dollars, and you’ll go far. But, in the grand halls of international finance, Greece has, as top financial brains would say, struck out. It set loan default records as it failed to pay up to the International Monetary Fund (IMF). It has become the first developed country to default on the IMF, as the rescue programme that has sustained it for five years has expired and its creditors have rejected a last-ditch effort to buy more time. The Washington-based fund said the Greek government had failed to transfer the necessary sum, the equivalent of just over R21 billion, by its June 30 deadline – the largest single missed payment in IMF history. And the result of this, wrote the Wall Street Journal, was that: “For Greeks, the fear is that Monday was deja vu, a return to a past not that distant. Before the euro replaced the drachma in 2002, the Greeks were already a European bête noire, their currency mostly trapped inside their nation, where cash was king and checks (cheques) a novelty.” It had been a case of the Greek cash-dependency digging it deeper into the loan mire with each passing week – as it had to borrow cold, hard cash from banks around the Eurozone. As Bloomberg said: “Its liabilities to the rest of the Euro area for the excess physical cash it has to put into circulation quadrupled between December and April, the last month for which there’s available data.” And then there was the IMF survival cash. And then came the crash! INSERT R1bn SA's total trade with Greece in 2014.