PwC South Africa tweeted its analysis, saying it “believes that the Budget Speech of 2018 should be enough to keep Moody’s Investors Service from making another cut in South African’s sovereign rating”.
Rob Johnson, head of investments at Nedgroup Investments, disagrees; saying the budget does not do enough to convince Moody’s not to downgrade.
He said there is some “hope in the upgrade of GDP projections, the strength of the government to increase VAT in the face of criticism from the tripartite and the desire shown to curb spending”.
“However, the country faces many challenges, some of which are not controllable such as the impact of weather on Agriculture and the sustainability of global growth, in order to maintain a path toward improving economic, institutional and fiscal trends,” Johnson said.
While the budget on its own might not be enough, Johnson said the combination of a budget in the right direction, a new political direction, and the continued restructuring at SOEs were all positive signs for the economy.
“Which has a good chance of persuading Moody’s to give the country more time before instigating a downgrade,” Johnson said.
