SA’s budget deficit narrows

File picture: Denis Farrell

File picture: Denis Farrell

Published May 31, 2016

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Johannesburg - South Africa recorded a deficit of R29 billion last month, the first month of the 2016/17 financial year, compared with R41bn over the same period last year, Treasury data showed yesterday.

S&P Global Ratings and Fitch will be citing the budget deficit when they make their rating decisions on Friday and next Wednesday respectively.

Read: SA braces for verdict from ratings agencies

The country’s financing needs have become pronounced as the deficit swelled to an average of about 4 percent of gross domestic product in the past four years.

Moody’s earlier this month kept South Africa’s sovereign rating at Baa2, with a negative outlook, two notches above junk.

The ratings agency said South Africa’s budget displayed a high degree of flexibility. It said the Treasury had re-established an unallocated spending buffer in the new budget framework and had also been able to shift allocations to other emergency needs.

“Such flexibility will be supportive in allowing the government to address unanticipated developments without breaching the spending ceilings. The authorities have also stated that expensive new projects such as the construction of massive nuclear power facilities and national health insurance will be developed only at the pace and scale that the budget allows.”

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