Moody’s predicts that South Africa’s coalition government will reach a budget compromise that focuses on fiscal consolidation. Despite tensions and opposition to proposed changes, Moody’s expects the budget’s key objectives to remain intact, including projections for public debt to peak in the upcoming fiscal year.
Moody’s Investors Service anticipates that South Africa’s coalition government will successfully negotiate a compromise regarding the passage of its budget while maintaining its focus on fiscal consolidation. In a statement from March 17, Moody’s noted that they expect an orderliness in the approval process, despite existing tensions within the coalition government, referred to as the Government of National Unity (GNU).
The South African budget faced delays due to disputes among coalition members over a controversial proposal to increase value-added tax (VAT). This came prior to Finance Minister Enoch Godongwana’s presentation of a revised budget in parliament. Although the amendment aimed to mitigate the proposed VAT increase, major political parties expressed their opposition to the changes, prompting ongoing negotiations to resolve the budget standoff.
The revised fiscal plan is projected to see public debt peak in the upcoming fiscal year beginning April 1, a forecast that Moody’s believes will endure in the final budget approved by parliament.
In summary, Moody’s expects a successful compromise within South Africa’s coalition government aimed at passing the budget, with an emphasis on fiscal consolidation despite intra-party tensions. Following delays caused by VAT discussions, the coalition must navigate legislative disagreements as it seeks to finalize a budget that addresses public debt effectively.
Original Source: money.usnews.com
