Ratings agency Fitch said Finance Minister Tito Mboweni’s medium-term budget policy statement (MTBPS) failed to outline a clear path to stabilise government debt.
“Rising real primary expenditure underlines the difficulty of reining in the public sector wage bill and persistent social pressures for better services in the context of divisions within the governing ANC. The MTBPS contains significantly worse fiscal projections than the February budget,” said Fitch spokesperson Peter Fitzpatrick.
“We anticipated significant deterioration in fiscal metrics relative to the February budget forecasts when we revised the rating outlook on South Africa’s ‘BB+’ sovereign rating to negative in July. We forecast a fiscal deficit in the current fiscal year of 6.3% and a rise of gross loan debt to 66.6% in 2021/2022 at our last review. The higher gross loan debt forecast in the MTBPS reflects a smaller planned adjustment over the coming three years than we had expected,” said Fitzpatrick.
“The MTBPS’s forecasts also incorporate additional commitments to Eskom of R69 billion [1.3% of GDP] over 2019/20 to 2021/22. These previously announced commitments go beyond those in the February budget, which were worth 0.4% of GDP per year.”