Sign in
Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
FX Report
The Loop
Inside China
Insights & Strategy
Equities link-chevron Created with Sketch.
Corporate Commissioned Research
Analysts
Analysts
Help and Support
Help and Support
Corporate and Investment Bank
Standard Bank Group
The SA Daily 22 February 2018

Fiscal steps should stave off downgrade

Elna Moolman

  • The budget deficit and debt trajectories have improved, compared to the 2017 MTBPS. The budget deficit is projected to narrow from 4.6% of GDP in FY17/18, to 3.8% in FY18/19 (previously 4.5% in the 2017 MTBPS). The debt trajectory is projected to stabilise by 2022, at 56.2% of GDP. These improvements come on a combination of substantial tax hikes, improved growth, and expenditure cuts.
  • The key fiscal adjustments are tax hikes worth R36bn in FY18/19 (which feed through to the outer forecast years); and R85bn of spending cuts over the medium term. These measures are counteracted by the R57bn allocated to free tertiary education.
  • The primary budget deficit is forecast to improve gradually from a deficit of 1.2% of GDP in FY17/18, to zero in FY20/21. This is crucial for fiscal sustainability. However, we still see the stabilisation of the debt trajectory as the most important metric from this perspective. This supports our expectation that Moody’s will not downgrade SA next month (see our report Budget 2018 of 22 February).

Read PDF