BUDGET SHORTFALL
HILARY JOFFE: Ratings agencies circle as Gigaba weighs options
‘Revenue shortfalls and the likely pressure on the spending ceiling suggest the budget gap will not close over the next three years’
Will SA’s credit ratings be downgraded before the end of 2017? Many in the market have been expecting that the ratings agencies that have SA on negative outlook, S&P Global and Moody’s, could wait for the outcome of the ANC’s December elective conference before they make a decision. But as we head into October’s medium-term budget policy statement, there is a distinct possibility that the figures could be bad enough to trigger an immediate downgrade. The tax experts are starting to crunch the numbers and it looks as though there will be a shortfall of at least R40bn in the 2017-18 fiscal year, which would rise to R50bn in the 2018-19 year and even higher than that in the following year, assuming the finance minister doesn’t add any more tax hikes to those already pencilled in. A R40bn shortfall would add about one percentage point to the main budget deficit, lifting it to 4.5%, from the 3.5% projected in the February budget.The shortfall not only reflects lower than expected growth,...
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