Credit ratings agency Moody’s expects SA’s government finances and debt profile to deteriorate further and economic growth to recover only slowly over the next two years.
It also forecasts bigger budget deficits — 4.9% in 2019 compared with the Treasury’s 4.5% — and a higher debt trajectory, which will reach 65% of GDP by 2023. Moody’s notes SA’s credit strengths as: strong institutions, such as the SA Reserve Bank and judiciary; a well-capitalised banking sector and deep financial markets; and a low share of foreign-denominated debt held by the government and the broader economy.
“Any reversal will be gradual at best given that social, economic and fiscal policy objectives will remain difficult to reconcile.”
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