{"id":13930,"date":"2025-03-18T19:21:50","date_gmt":"2025-03-18T20:21:50","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=13930"},"modified":"2025-03-18T21:21:26","modified_gmt":"2025-03-18T21:21:26","slug":"moodys-and-fitch-see-south-africas-debt-burden-outpacing-budget-forecasts","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/moodys-and-fitch-see-south-africas-debt-burden-outpacing-budget-forecasts\/","title":{"rendered":"Moody\u2019s and Fitch see South Africa\u2019s debt burden outpacing Budget forecasts"},"content":{"rendered":"

This post<\/a> was originally published on this site<\/a><\/p>

<\/p>\n

Credit ratings agencies have warned that South Africa\u2019s national government debt will stabilise higher in relation to gross domestic product (GDP) than anticipated by the National Treasury during the 2025 Budget tabled last week. <\/span><\/p>\n

This comes as the gross government debt is projected to reach R5.69 trillion or 76.1% of gross domestic product (GDP) this year.<\/span><\/p>\n

Finance Minister Enoch Godongwana last week forecast that the debt ratio will peak in the coming fiscal year, before gradually declining from fiscal 2026-27 given primary surpluses.<\/span><\/p>\n

Godongwana said the government projected that gross debt-to-GDP will stabilise at 76.2% of GDP in the 2025 fiscal year, compared with 76.1% in 2024, before declining gradually thereafter.<\/span><\/p>\n

The budget forecasts the fiscal deficit will fall to 3.5% of GDP by fiscal 2027\/28, a slight worsening compared to the 3.2% forecast in last October’s medium-term budget policy statement (MTBPS).<\/span><\/p>\n

However, Moody\u2019s Investor Services on Tuesday said this compared with an estimated deficit of 5% of GDP in fiscal 2024\/25, which is unchanged as higher than budgeted spending in the last fiscal year will be met with higher than expected revenue. <\/span><\/p>\n

\u201cOur forecasts are similar: we expect the fiscal deficit to gradually decline and general government debt, which since 2019 includes most government guarantees provided to state-owned enterprises (SOE), to stabilise at around 80% of GDP,\u201d Moody\u2019s said.<\/span><\/p>\n

On Friday, Fitch Ratings also said the government\u2019s debt projections were more optimistic than the latest assumption that debt will reach 78.8% of GDP in 2025, from 77% in 2024, and will continue to increase in 2026. <\/span><\/p>\n

Fitch said it could be positive for the sovereign\u2019s rating if debt followed the path projected by the government.<\/span><\/p>\n

\u201cThe divergence in debt projections over FY24-FY25 partly reflects our assumption that the government will take debt from the state-owned logistics company, Transnet, worth 0.7 percentage points of GDP, though the budget\u2019s increase in infrastructure spending may reduce the likelihood of such a transfer,\u201d Fitch said. <\/span><\/p>\n

\u201cExcluding this, and incorporating the announced revision of Eskom\u2019s debt transfer, our debt\/GDP forecast would be 76.6% in FY24 and 77.8% in FY25. The remaining difference comes from our lower projections for the primary surplus and nominal GDP.\u201d<\/span><\/p>\n

Meanwhile, Moody\u2019s said there were risks the the adoption of the Budget could be delayed further because it still lacks the support of the second-largest party in the Government of National Unity (GNU). <\/span><\/p>\n

The Democratic Alliance (DA) said that it would not support the budget as tabled over the proposal to increase the value-added tax (VAT), despite the government moderating the VAT increase to 0.5% for 2025 and 2026, respectively. <\/span><\/p>\n

Moody\u2019s said this suggested continuing policy disputes in the GNU, making building consensus within the coalition harder.<\/span><\/p>\n

It said these political disputes will also complicate efforts to find new funding sources to address rising social spending pressures in coming years while growth remains low. <\/span><\/p>\n

\u201cHowever, the tabled budget shows a gradually improving fiscal trajectory, notwithstanding a marginal deterioration relative to the last budget plan. Continued friction within the GNU means there may still be some changes to fiscal measures before parliament approves the budget, but we expect the budget’s overall focus on fiscal consolidation to remain,\u201d Moody\u2019s said.<\/span><\/p>\n

\u201cOur baseline assumptions for the GNU factor in frictions in the budget process. The DA has said that it is open to further negotiations before budget instruments are voted on from 2 April. This creates uncertainty around which policy measures parliament will approve, although the focus on fiscal consolidation, with debt peaking in fiscal 2025\/26, is unlikely to change. Our baseline is for the GNU to reach a compromise, leading to an orderly approval of the budget.\u201d<\/span><\/p>\n

BUSINESS REPORT<\/strong><\/p>","protected":false},"excerpt":{"rendered":"

Credit ratings agencies have warned that South Africa\u2019s national government debt will stabilise higher in relation to gross domestic product (GDP) than anticipated by the National Treasury during the 2025 Budget tabled last week.\u00a0This comes as the gross government debt is projected to reach R5.69 trillion or 76.1% of gross domestic product (GDP) this year.Finance Minister Enoch Godongwana last week forecast that the debt ratio will peak in the coming fiscal year, before gradually declining from fiscal 2026-27 given primary surpluses.Godongwana said the government projected that gross debt-to-GDP will stabilise at 76.2% of GDP in the 2025 fiscal year, compared with 76.1% in 2024, before declining gradually thereafter.The budget forecasts the fiscal deficit will fall to 3.5% of GDP by fiscal 2027\/28, a slight worsening compared to the 3.2% forecast in last October’s medium-term budget policy statement (MTBPS).However, Moody\u2019s Investor Services on Tuesday said this compared with an estimated deficit of 5% of GDP in fiscal 2024\/25, which is unchanged as higher than budgeted spending in the last fiscal year will be met with higher than expected revenue.\u00a0\u201cOur forecasts are similar: we expect the fiscal deficit to gradually decline and general government debt, which since 2019 includes most government guarantees provided to state-owned enterprises (SOE), to stabilise at around 80% of GDP,\u201d Moody\u2019s said.On Friday, Fitch Ratings also said the government\u2019s debt projections were more optimistic than the latest assumption that debt will reach 78.8% of GDP in 2025, from 77% in 2024, and will continue to increase in 2026.\u00a0Fitch said it could be positive for the sovereign\u2019s rating if debt followed the path projected by the government.\u201cThe divergence in debt projections over FY24-FY25 partly reflects our assumption that the government will take debt from the state-owned logistics company, Transnet, worth 0.7 percentage points of GDP, though the budget\u2019s increase in infrastructure spending may reduce the likelihood of such a transfer,\u201d Fitch said.\u00a0\u201cExcluding this, and incorporating the announced revision of Eskom\u2019s debt transfer, our debt\/GDP forecast would be 76.6% in FY24 and 77.8% in FY25. The remaining difference comes from our lower projections for the primary surplus and nominal GDP.\u201dMeanwhile, Moody\u2019s said there were risks the the adoption of the Budget could be delayed further because it still lacks the support of the second-largest party in the Government of National Unity (GNU).\u00a0The Democratic Alliance (DA) said that it would not support the budget as tabled over the proposal to increase the value-added tax (VAT), despite the government moderating the VAT increase to 0.5% for 2025 and 2026, respectively.\u00a0Moody\u2019s said this suggested continuing policy disputes in the GNU, making building consensus within the coalition harder.It said these political disputes will also complicate efforts to find new funding sources to address rising social spending pressures in coming years while growth remains low. \u201cHowever, the tabled budget shows a gradually improving fiscal trajectory, notwithstanding a marginal deterioration relative to the last budget plan. Continued friction within the GNU means there may still be some changes to fiscal measures before parliament approves the budget, but we expect the budget’s overall focus on fiscal consolidation to remain,\u201d Moody\u2019s said.\u201cOur baseline assumptions for the GNU factor in frictions in the budget process. The DA has said that it is open to further negotiations before budget instruments are voted on from 2 April. This creates uncertainty around which policy measures parliament will approve, although the focus on fiscal consolidation, with debt peaking in fiscal 2025\/26, is unlikely to change. Our baseline is for the GNU to reach a compromise, leading to an orderly approval of the budget.\u201dBUSINESS REPORT<\/p>","protected":false},"author":1,"featured_media":13108,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-13930","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/13930","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=13930"}],"version-history":[{"count":1,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/13930\/revisions"}],"predecessor-version":[{"id":13931,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/13930\/revisions\/13931"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/13108"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=13930"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=13930"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=13930"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}