Treasury report cites ‘significant risks’ to SA’s fiscal outlook
10 July 2019 - 18:29
byWendell Roelf
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SA faces “significant risks” to its fiscal outlook, including weak economic growth and uncertain revenue collection, the National Treasury said in its 2019/2020 annual performance report, put before parliament on Wednesday.
The economy contracted 3.2% in the first quarter, its worst performance in a decade as President Cyril Ramaphosa’s growth drive struggled to gain traction.
“Risks to the fiscal outlook remain significant and include weak economic growth, uncertainty in the revenue outlook and the poor financial position of major state-owned [entities] (SOEs),” said the National Treasury.
Big SOEs, including power utility Eskom, arms manufacturer Denel and airline SAA, have asked the government for additional bailouts to ensure they can continue operating.
SA is weighing extra options to support Eskom, which implemented widespread power cuts earlier in 2019, including swapping its debt for government bonds or ring-fencing it in a special account, a senior National Treasury official told Reuters last week.
Finance minister Tito Mboweni is expected to provide further details on government plans to accelerate funding from a R230bn government guarantee to Eskom during his budget vote speech on Thursday evening.
“External factors, including a general rise in bond yields, slowing global growth, higher interest rates and further exchange rate depreciation, will also play a major role in the government’s ability to narrow the budget balance and stabilise debt,” the National Treasury said in its report.
Moody’s, the last of the big three international credit ratings agencies to assign SA investment-grade status, lowered its forecast for 2019 economic growth to 1% from 1.3% after the first-quarter contraction.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Treasury report cites ‘significant risks’ to SA’s fiscal outlook
SA faces “significant risks” to its fiscal outlook, including weak economic growth and uncertain revenue collection, the National Treasury said in its 2019/2020 annual performance report, put before parliament on Wednesday.
The economy contracted 3.2% in the first quarter, its worst performance in a decade as President Cyril Ramaphosa’s growth drive struggled to gain traction.
“Risks to the fiscal outlook remain significant and include weak economic growth, uncertainty in the revenue outlook and the poor financial position of major state-owned [entities] (SOEs),” said the National Treasury.
Big SOEs, including power utility Eskom, arms manufacturer Denel and airline SAA, have asked the government for additional bailouts to ensure they can continue operating.
SA is weighing extra options to support Eskom, which implemented widespread power cuts earlier in 2019, including swapping its debt for government bonds or ring-fencing it in a special account, a senior National Treasury official told Reuters last week.
Finance minister Tito Mboweni is expected to provide further details on government plans to accelerate funding from a R230bn government guarantee to Eskom during his budget vote speech on Thursday evening.
“External factors, including a general rise in bond yields, slowing global growth, higher interest rates and further exchange rate depreciation, will also play a major role in the government’s ability to narrow the budget balance and stabilise debt,” the National Treasury said in its report.
Moody’s, the last of the big three international credit ratings agencies to assign SA investment-grade status, lowered its forecast for 2019 economic growth to 1% from 1.3% after the first-quarter contraction.
Reuters
Business unhappy with Cyril Ramaphosa’s reforms so far
Medium-term budget set to reflect higher debt-to-GDP ratio
Fiscal pressures are mounting, warns Treasury official
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