38. Political unrest following constitutional changes in 1983 and elections in 1984, repression and the declaration of the first state of emergency in July 1985, and subsequent pressures for sanctions, all contributed to substantial outflows of capital and cessation of loans to South Africa. International financial confidence had been considerably weakened. In mid-1985. South Africa faced a major financial crisis when the New York Times (31 July 1985) reported that Chase Manhattan had refused to roll over short-term credit or advance new credit, and other United States banks followed suit. The result of the 1985 crisis was to cut off South Africa from major capital markets and the cessation of all conventional lending. 39. In September 1985, to prevent a run on its foreign exchange reserves, the South African Government took two measures that were to play a key role in countering the impact of financial sanctions. First, the Government imposed a unilateral moratorium on the pa)rment of the principal of short-term international debt falling due during the next four months, and subsequently extended this until the end of March 1986. Second, it reimposed the dual exchange rate system abandoned in 1983 which seeks to make capital placement in South Africa more attractive by increasing the cost of withdrawing it. 40. Anxious to restore normal relations with the international financial community and regain access to international financial markets, the South African Government also worked out three successive agreements with its creditors, in 1986, 1987 and 1989. In this way. South Africa sought to retain some of its fxmds and to buy time in which to re-establish the country's creditworthiness. The second and third agreements provided for 'exit options' that would allow for the conversion of short-term frozen debt into long-term 10-year loans. 41. These various rescheduling arrangements, considerably eased the pressure 
**Analysis**
The text primarily discusses the economic situation of South Africa, specifically the financial crisis it faced in 1985 and the subsequent measures taken by the government to address it. It highlights the impact of international sanctions and the country's efforts to re-establish its creditworthiness. The text also mentions agreements with creditors and the rescheduling of debt, indicating a focus on economic development and international trade.

**Category**
International trade, Economic development