CAPE TOWN - South Africa will struggle to finance the public services that form the largest part of its budget due to falling revenues and an economy in recession, the National Treasury told lawmakers on Tuesday, a week ahead of the medium-term budget.
“The contraction of our public finances is placing tremendous stress on us and our ability to finance public services and this threatens the affordability of planned expenditure,” Treasury’s Director-General Dondo Mogajane told a parliamentary committee.
The rand inched lower early on Tuesday due to profit-taking as the dollar regained some ground after sliding on poor retail sales data.
At 06:30 local time the rand was 0.07 percent weaker at 14.3750 per dollar, down from an overnight best of 14.3250 as its three-session rally ran out of steam.
The rally was sparked by the decision by Moody’s to delay its review on South Africa’s sovereign debt, already seen as a low-risk event by investors, and was helped by the greenback’s recent wobbles.
At 12:00 local time, the rand stood at R14.33 to the dollar.