SA’s medium-term budget unveils a weaker fiscal outlook, which is credit-negative, Moody’s Investors Service says.
“The revenue assumptions underpinning the medium-term fiscal
projections are achievable, but the broadly unchanged spending ceilings
will be challenging to meet as the government aims to strike a balance
between economic, social, and fiscal objectives,” the credit company
said in an issuer comment Thursday.
Moody’s, the only one of three major ratings companies that still
assesses SA at investment grade, has said it wants to see government
debt stabilising. It will peak two years later, and higher, than
previously forecast, finance minister Tito Mboweni said in the
medium-term budget policy statement on Wednesday. The fiscal gap will
widen further and state revenue will continue to undershoot, he said.
The Treasury more than halved its economic growth forecast
for 2018 to 0.7% after the economy plunged into a recession in the first
half of the year. GDP hasn’t expanded at more than 2% annually since
2013 and unemployment is at 27%.
Bloomberg
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