Investec expects no downgrading

Image courtesy Chance Agrella/

Image courtesy Chance Agrella/

Finance Minister Pravin Gordhan’s budget speech reinforced Investec’s view that South Africa would not receive a credit ratings downgrade this year, the company said on Wednesday.

Senior economist Annabel Bishop said this was reflected in the country reversing its prior trend of fiscal slippage and having maintained tight control over real spending growth.

She described the budget as better than expected and said it showed commitment to fiscal restraint.

“We believe today’s budget outcome is highly unlikely, in isolation, to prompt any of the rating agencies to downgrade SA’s sovereign credit rating.”

By the 2016/2017 financial year, a current savings surplus was expected, Bishop said.

“This should further cheer the rating agencies, which should have little to take issue with in this budget and much to congratulate SA for in turning the fiscal ship around.”

Bishop said that of the country’s population of around 52 million, 633,151 taxpayers earned over R500,000 per year. Another 16m people received social welfare.

She said the number of people on social welfare was expected to rise to 16.5m in 2016/17, showing a stabilisation in numbers and costs.

“This should allay fears of fiscally unsustainable populist tendencies in government finances while simultaneously showing firm commitment to alleviating the suffering of the most vulnerable members of our society,” Bishop said.







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