Moody’s welcomes SA’s spending cuts

Finance Minister Pravin Gordhan delivers the annual Budget speech in Parliament on February 24, 2016. Picture: Mike Hutchings

Finance Minister Pravin Gordhan delivers the annual Budget speech in Parliament on February 24, 2016. Picture: Mike Hutchings

Published Feb 25, 2016

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#Budget2016 / Johannesburg - Moody's, one of the main credit rating agencies, welcomed Finance Minister Pravin Gordhan's cuts in government spending and tax increases.

However, it said he had not yet provided details on how he would achieve smaller deficits and his growth forecasts were optimistic.

Read: No surprises in #Budget2016

Kristin Lindow, senior vice-president at Moody's, said: “In (our) opinion, South Africa's 2016/17 budget aims at delivering faster fiscal consolidation in part by cutting the large civil servant wage bill while preserving growth-supporting capital spending.”

“Moody's also views the planned tax increases as well-targeted given the weak economic backdrop.”

“However, the specific revenue measures that will accomplish the smaller deficits predicted for 2017/18 and 2018/19 have not yet been identified. Moreover, Treasury's revised growth forecasts of 0.9% and 1.7% are still slightly more optimistic than Moody's own predictions of 0.5% for 2016 and 1.5% for 2017.”

ANA

Be sure to follow #Budget2016 developments on Business Report as we bring you news, reviews, analysis and opinion regarding Finance Minister Pravin Gordhan's speech on February 24 and 25.

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