Moody’s predicts that South Africa’s coalition government will reach a budget compromise, supporting fiscal consolidation. Despite some parliamentary parties rejecting the revised budget, negotiations are ongoing. Moody’s expects public debt targets to be maintained in the final approved version.
Moody’s, a leading ratings agency, anticipates that South Africa’s coalition government will successfully negotiate a compromise, allowing the country’s stalled budget to pass while maintaining its focus on fiscal consolidation. In a recent comment dated March 17, Moody’s expressed optimism about the Government of National Unity (GNU) reaching an agreement that would lead to an orderly budget approval.
The ongoing tensions within the GNU may result in some adjustments to fiscal measures before parliamentary approval. Nonetheless, Moody’s maintains that the overall emphasis on fiscal consolidation is likely to persist. The budget’s approval was delayed last month due to disagreements over a controversial plan to increase value-added tax (VAT); Finance Minister Enoch Godongwana subsequently presented a revised version to parliament.
Despite the scaled-back VAT increase in the amended budget, most major parliamentary parties have voiced their opposition, prompting ongoing negotiations to resolve the deadlock. The revised budget sets a target for public debt to peak in the fiscal year beginning on April 1, which Moody’s projects will be upheld in the final version approved by parliament.
In conclusion, Moody’s forecasts a compromise will be achieved within South Africa’s coalition government, facilitating the passage of the budget while emphasizing fiscal consolidation. Despite political friction and initial resistance to the revised budget, there is optimism that key fiscal targets will be preserved. As negotiations continue, the eventual budget approval remains pivotal for the nation’s financial stability.
Original Source: money.usnews.com
