Moody’s projects that South Africa’s coalition government will reach a compromise on the budget, despite ongoing tensions within the Government of National Unity. The budget was delayed due to disputes over a VAT increase plan, and a revised version faced public rejections. Nevertheless, Moody’s predicts that the overall focus on fiscal consolidation and public debt management will persist.
Moody’s anticipates that South Africa’s coalition government, known as the Government of National Unity (GNU), will ultimately secure a compromise, allowing the contentious budget to be approved while maintaining a focus on fiscal consolidation. In a comment dated March 17, Moody’s stated that despite persistent tensions within the GNU, the budget’s emphasis on fiscal consolidation is expected to remain intact.
The postponement of the budget last month resulted from disputes among coalition members regarding a controversial plan to increase value-added tax (VAT). Finance Minister Enoch Godongwana subsequently presented a revised budget to parliament, but many significant parliamentary parties rejected it, even though the size of the proposed VAT increase was reduced. Ongoing negotiations aim to resolve the stalemate.
Moody’s noted that the revised budget aspires for public debt to peak in the fiscal year beginning April 1, and they predict this target will be upheld in the final budget approved by parliament.
In summary, Moody’s forecasts a compromise within South Africa’s coalition government regarding the budget, emphasizing fiscal consolidation. Ongoing tensions, particularly over VAT increases, have resulted in revisions and negotiations, yet the focus on managing public debt remains a priority as the government works towards budget approval.
Original Source: money.usnews.com
