Cape Town – The South African’s forecast of higher debt and wider deficits over the next coming 3 years raises risks. They raise the risk of further downgrade in the credit ratings, as a battle for control of the ruling party limits policy choices.
In his first mid-term budget on Wednesday with the growth and revenue set to fall well short of projections made in February this year, the Minister of Finance, Malusi Gigaba has painted an unwelcoming picture of the state of the country’s finance.
He also warned that there was little scope to either raise taxes or to cut spending. The country’s currency fell to the weakest level this year and the bond yields surged.
Gigaba told landmarkers in Cape Town that, “It is not in the public interest, nor is it in the interest of the government, to sugarcoat the state of our economy and the challenges we are facing”.
He also went on to say, “Improving our eceonmy growth outlook over the period ahead remains our biggest challenge”.
The Deputy Minister of Finance Sfiso Buthelezi said that Gigaba and his team spoke to the country’s rating companies on the phone on Wednesday after he released the budget speech.
They planned to meet with firms next Wednesday.