Large capital inflows into emerging market economies is a development that is likely to persist for some time, the South African Reserve Bank (SARB) said in its October Monetary Policy Review report released Thursday

LET us survey the damage. The spike in bond yields, from 8.66% to 10.4% during the course of last week, is going to hurt immediately.

On Tuesday and Thursday, the Reserve Bank will hold its usual scheduled bond auctions to raise funding for government operations. That funding is now going to cost almost 17% more to service. Typically, about R4bn is raised per fortnight. If the same amount is raised this week, it will cost us R70m more than it would have in interest per year.

Over the course of a year’s fundraising, it will add up to R1.8bn extra in debt service costs. That is seven Nkandlas that taxpayers will be paying for, every year, money that could have been spent on poverty relief, infrastructure and many other things needed to confront the highest unemployment rate in our democratic history.

Then there is the currency.

That depreciated almost 10% against all major currencies on Thursday and Friday.

The Treasury has been prudent in borrowing relatively little in foreign currency, with only $7.7bn of foreign currency-denominated debt. In rand terms, though, that liability just grew by about R8bn. That’s about 42 Nkandlas.

Of course, the effect on our debt balance is just the tip of the iceberg. Every piece of major infrastructure, such as the 1,064 diesel and electric locomotives Transnet is set to import up to March 2018, will cost 10% more than it would have. That will add billions more to the cost, equivalent to hundreds of Nkandlas.

That is a burden we will all share as taxpayers, but then there is the effect on us as consumers. Every drop of oil and tonne of maize we import will cost 10% more. Thanks to the drought, we are set to be major net importers of food this year.

That will hit the consumption basket of every South African, rich and poor, making every one of us poorer in real terms.

Then there is the effect on asset prices. Our banks were swiftly downgraded by Fitch on Friday, which contributed to an 18.5% decline in the value of bank shares on Thursday and Friday. Of course, that hurts the people and institutions who depend on the return from those shares, but it also hurts banks’ ability to grow and finance our economy. The biggest single constraint to banks’ lending is the amount of capital they hold. When their share prices fall, that capital becomes more expensive, so less is available to support their activities. As a result, fewer home loans are made, fewer projects funded and, ultimately, fewer people employed.

Banks were hardest hit, but the wider all share index was down almost 3% over the two days. That’s despite the positive effect on companies that earn money in hard currency, which makes up most of the larger end of the index. That 3% is equivalent to R170bn of value, or 680 Nkandlas. The biggest investor on the JSE is the Government Employees Pension Fund.

When returns are poor, the government has to top up the assets of the fund to enable it to meet its obligations to retired public servants.

So poor JSE returns directly translate into an increased additional burden on taxpayers.

That is just the effect in two days following the decision. More will come. Inflation is set for a significant spike. Interest rates are also certain to shoot upward, perhaps by 100 basis points in January. That will affect every net borrower, consuming more of their disposable income and restraining their ability to spend and drive the economy.

We are now certain to be downgraded to junk status, with the only uncertainty being whether it will happen before or after the February budget.

That will lead to a massive withdrawal of foreign funding from our markets. The government will find it nearly impossible to raise money from foreign investors the way it has been able to in the past 20 years.

With foreign funding closed to it, it will have no choice but to increase taxes, probably both VAT and income tax. That will further restrain consumers’ ability to spend in the economy. The heightened tax burden, higher interest rates and higher inflation will further damage consumer and business sentiment, leading to cash-hoarding and risk-averse behaviour. That will wipe out fixed investment spending, the main driver of sustainable economic growth.

The record high unemployment rate is sure to worsen.

How do we unwind the damage done? There is only one possible answer: new political leadership that will restore confidence in the economic management of the country.

We have reached the point where the reward for one simple decision — to replace the president — is so massive that it is hard to imagine anyone will be able to resist it.