Budget 2016: Moody’s welcomes cuts in spending
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.
Kristin Lindow, Senior Vice President, Moody’s said: “In Moody’s 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.”