Following finance minister Tito Mboweni’s maiden budget speech last week, economists and analysts are split on whether SA will again avoid a credit rating downgrade to sub-investment grade by Moody’s when it issues its rating review on March 29. Those who believe Moody’s will downgrade the country’s last remaining investment grade rating cite the deterioration in the fiscal position. I believe Moody’s will neither change the stable outlook nor downgrade the credit rating. Total government debt stabilises at 60% of GDP seven years later than expected in 2023/2024, while the consolidated fiscal deficit widens to 4.5% of GDP in fiscal 2019/2020 before narrowing to 4% in 2021/2022. This represents less than one percentage point of GDP in fiscal slippage. The breach of the expenditure ceiling is concerning, but we already know Moody’s view on that — the rating agency said it is unlikely to weaken the fiscal policy credibility given increased fiscal transparency and the long track record ...

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