JOHANNESBURG (Reuters) – Fitch ratings agency said on Friday that it thought South Africa’s government would struggle to stabilise debt as projected in this week’s revised budget.
“South Africa’s 2025 budget, unveiled on 12 March, indicates that the government remains committed to fiscal consolidation, despite upward pressure on public expenditure,” Fitch said.
“The budget has narrowed the gap between our projections for the fiscal deficit and those of the government, but we remain less optimistic that general government debt is stabilising, with Fitch’s baseline indicating that debt/GDP will continue to rise in the next two years.”
Finance Minister Enoch Godongwana’s amended budget projected that debt would peak at 76.2% of GDP in the fiscal year that starts on April 1.
Fitch said: “This is more optimistic than our latest assumption that debt will reach 78.8% of GDP in FY25, from 77% in FY24, and will continue to increase in FY26. It could be positive for the sovereign’s rating if debt follows the path projected by the government.”
Most big parliamentary parties have publicly rejected Godongwana’s amended budget, despite it scaling back the size of a contentious hike in value-added tax. The budget was earlier postponed because of disagreements in the ruling coalition.
(Reporting by Tannur Anders; Editing by Alexander Winning)
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