Picture: Mike Segar/Reuters/African News Agency (ANA)
Picture: Mike Segar/Reuters/African News Agency (ANA)

Budget Speech 2020: Mboweni thinks budget can pass muster with Moody's

By ANA Reporter and Siphelele Dludla Time of article published Feb 26, 2020

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PARLIAMENT  - Finance Minister Tito Mboweni on Wednesday said he believed Moody's ratings agency would primarily consider whether his 2020 budget committed the country to fiscal discipline and might on that basis maintain South Africa's only remaining investment grade credit rating.

"Our reading of the situation is that they will react to how they read our fiscal stance," Mboweni told a media briefing ahead of tabling the budget in Parliament.

He said while the budget deficit would rise to 6.8 percent of GDP in 2020/21, it was clear that the government was determined to drive it down in the outer years.

"I don't know, but I don't think they will re-rate us on our fiscal stance,"  he said.

"They may give us a bit of clap but we will absorb that because we have already clapped ourselves... but I don't think they will do anything untoward," he said.

Moody's at the moment has South Africa on Baa3 rating, the last step before “junk” status.

Moody’s slashed the country’s growth forecast by more than half to 0.7 percent this year from the 1.5 percent it projected five months ago.

The rating's agency cited muted consumer demand and the negative impact on the economy caused by Eskom’s load shedding for the change in forecast.

“We attribute the persistent economic weakness to lacklustre domestic private-sector demand - both household spending and investment - and the detrimental impact of widespread power outages on the manufacturing and mining activity,” Moody’s said.

African News Agency (ANA)

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