Moody’s foresees drop in government finances and debt profile
Expectation that credit profile will nevertheless remain in line with those of Baa3-rated countries partly explains why it did not take a rating decision
Credit ratings agency Moody’s expects SA’s government finances and debt profile to deteriorate further and economic growth to recover only slowly over the next two years. But despite this the agency said in a report on Tuesday that it expects the country’s credit profile “to remain in line with those of Baa3-rated sovereigns”, partly explaining why it chose not to take a rating decision as scheduled on March 29. The agency said it expects growth to reach 1.3% in 2019 and 1.5% in 2020. This is more pessimistic than the Treasury, which forecast 1.5% and 1.7% respectively, and the Reserve Bank, which in March estimated growth at 1.3% and 1.8%, respectively. It also forecasts bigger budget deficits — 4.9% in 2019 compared with the Treasury’s 4.5% — and a higher debt trajectory, which will reach 65% of GDP by 2023. Moody’s was due to announce a rating decision on Friday, but decided not to do so, saying it would update its view again on November 1. The agency, which rates SA debt as Baa3...
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