Moody’s pours cold water on the government’s fiscal consolidation target
The ratings agency says SA’s economic growth will be weaker than the government expects while the public-sector wage bill rises
The South African government’s target of "fiscal consolidation" — reducing debt — in the near term is overly optimistic, credit ratings agency Moody’s said in a report on Wednesday. "We expect a slower pace fiscal consolidation than the government of SA is forecasting," Moody’s vice-president, Lucie Villa, wrote in the report titled "Government of SA: Fiscal slippages likely this year, but medium-term targets remain within reach". Moody’s forecast that economic growth would be weaker than the government expected while its public-sector wage bill rose. However, Moody’s stressed that the medium-term deficit targets still remained within reach. "If met, [these] will support a stabilisation of debt levels and reinforce Moody’s assessment of the sovereign’s fiscal and institutional strengths." Moody’s expects a fiscal deficit of about 4% of GDP in 2018-2019, which is 0.4 of a percentage point lower than the government’s target. The fiscal deficit is expected to reach the 3.5% target by 2...
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