Mboweni braced for ratings backlash
Treasury roadshow hopes to sell budget upside after ‘very difficult conversations’ with agencies
Finance minister Tito Mboweni was braced for a potential backlash from ratings agencies after unveiling a budget that pledged to plough R69bn into Eskom over the next three years and predicted the budget deficit would surge to the widest in a decade next year. That figure could grow to R150bn over the next decade, Treasury officials said separately. The initial market reaction was swift, though both the rand and government bonds later recouped losses that followed Mboweni’s announcement that the budget deficit would climb to 4.2% of GDP in the current year and reach 4.5% in 2020. It was at 3.7% in 2016. Government debt will peak at a higher level, with the debt-to-GDP ratio set to reach 60.2% in 2023/2024, compared with the previous estimate of 59.6%, he said. Fifteen minutes after Mboweni started speaking, the rand slipped 2.3% to R14.3661/$, the weakest level since early January. At 5pm it fully recovered to R14.0186/$, which was 0.18% stronger than on Tuesday. The yield on the R1...
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