SA economic outlook; when numbers give way to faith

CAPE TOWN — No matter how you crunch the numbers or how many top actuaries you hire; South Africa’s data-based economic outlook after a decade of looting, mismanagement and socialist policies remains dismal. Perhaps if Finance Minister Tito Mboweni was a Sangoma, ‘Siener’ or magician – or had the faith of a saint, he could confidently predict that we’re going to pull ourselves out of this mess to thrive like never before. The potential is certainly there. The recent history? Nah, not so good. So, when Moody’s Investor Service sounds a loud cautionary note over soaring government debt, perhaps it’s time to brace ourselves. The Moody’s of the world don’t list faith very high in their assessment criteria. They want hard turnaround numbers – or at least evidence of a strong positive trend. Perhaps that puts the faith ball squarely in our court. – Chris Bateman

Tito Mboweni
Finance Minister Tito Mboweni speaks during a news conference after presenting his mid-term budget to parliament in Cape Town on October 24 ,2018. Photographer: Waldo Swiegers/Bloomberg

By Ana Monteiro

(Bloomberg) – South Africa’s mid-term budget unveils a weaker fiscal outlook, which is credit-negative, Moody’s Investors Service said.

“The revenue assumptions underpinning the medium-term fiscal projections are achievable, but the broadly unchanged spending ceilings will be challenging to meet as the government aims to strike a balance between economic, social, and fiscal objectives,” the credit company said in an issuer comment Thursday.

Moody’s, the only one of three major ratings companies that still assesses South Africa at investment grade, has said it wants to see government debt stabilising. It will peak two years later, and higher, than previously forecast, Finance Minister Tito Mboweni said in the mid-term budget policy statement Wednesday. The fiscal gap will widen further and state revenue will continue to undershoot, he said.

The Treasury more than halved its economic growth forecast for 2018 to 0.7 percent after the economy plunged into a recession in the first half of the year. Gross domestic product hasn’t expanded at more than 2 percent annually since 2013 and unemployment is at 27 percent.

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