Ratings agency Moody’s has expressed scepticism that SA could achieve its debt stabilisation aims outlined in finance minister Tito Mboweni's supplementary budget.
In a statement late on Thursday evening Moody's said that “stabilising debt by 2023 in line with the government's target laid out in this budget will be very difficult to achieve given the challenging growth outlook and fiscal rigidities”.
The comment follows the sobering assessment of SA's finances delivered in the budget, where Mboweni outlined the dire need to rein in soaring debt levels, which are now expected to hit 81.8% of GDP by the end of this fiscal year.
The shock of the Covid-19 pandemic and the lockdown measures to slow its spread saw the Treasury dramatically reduce its forecasts for economic growth. It expects the economy to shrink by 7.2% in 2020.
Moody's said the speed at which the government recovers its revenue intake and curbs the debt spiral will drive SA's creditworthiness.