Fitch and S&P shaken by Gigaba's medium-term budget
Fitch says the move away from fiscal consolidation is happening faster than expected, and S&P thinks politics is trumping fundamentals
Finance Minister Malusi Gigaba’s medium-term budget policy statement (MTBPS) has shaken the confidence of credit rating agencies Fitch and S&P Global. Fitch said on Thursday that the medium-term budget pointed to a sharp fall in fiscal revenue, "but has no measures to contain the impact on deficits and debt…. This suggests that the change in direction of policy making away from a focus on fiscal consolidation, that we anticipated as a consequence of March’s Cabinet reshuffle, is under way and occurring faster than we had expected." Many economists fear that the "candid" statement from the minister did little to boost the confidence of investors or credit rating agencies and would lead to another credit rating downgrade in November. In April, Fitch downgraded SA’s credit rating to "junk" status, citing the March Cabinet reshuffle that saw respected finance minister Pravin Gordhan dismissed, anticipating a change in economic policy direction The negative outlook may mean SA is at risk...
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