State owned enterprises (SOE) may determine whether SA gets a credit rating downgrade to negative if they cannot service their debts. Credit rating agency Moody’s said that while the government set out fiscal consolidation targets consistent with the 2016 mid-year budget, government guarantees remain a concern. Senior analyst at Moody’s Investors Service Zuzana Brixiova said, "While government guarantees relative to GDP are also projected to stabilise, their actual drawdowns are rising and represent increasing risks to the government’s fiscal position." The total guarantees to SOEs amounted to R477.7bn in 2016-17 — roughly 10% of GDP. Added to the GDP debt, government’s debt ratio is between 60% and 65% of GDP. The portion of guarantees SOEs have borrowed against is R308.3bn. The biggest was Eskom’s guarantees that came in at R218.2bn. BNP Paribas economist Jeff Schultz said: "Eskom’s nuclear programme is a black swan to keep an eye on. They’ve put the nuclear programme onto their b...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.