Budget has not delivered SA from the ratings precipice
It was probably enough to stay ratings agencies’ hands but SA remains on the brink of a downgrade and political uncertainty could tip the scales, economists warn
Economists are concerned SA is not out of the woods for a credit rating downgrade. While Finance Minister Pravin Gordhan’s relatively conservative budget may have bought SA some time, ratings agencies are keeping a close eye on the country’s stability. Zuzana Brixiova, senior analyst at Moody’s Investors Service, said: "Amid challenging conditions, the 2017-18 budget sets out fiscal consolidation targets consistent with commitments in the 2016 mid-year policy statement, including a gradual stabilising of the debt-to-GDP ratio. "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." SA’s economy had a rough year in 2016 with growth of just 0.5%. With a modest recovery of 1.3% forecast for 2017, Gordhan said "green shoots" were discernible for the economy. But not all economists are convinced — SA may still be poised for a credit ratings downgrade if the politic...
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