Moody’s anticipates a budget agreement from South Africa’s coalition government

Moody’s, a ratings organization, anticipates that the coalition government in South Africa will come to an agreement that permits the country’s impassed budget to pass while maintaining its emphasis on fiscal discipline.

In a March 17 issuer remark, Moody’s stated, “Our baseline is for the GNU (Government of National Unity coalition) to reach a compromise, leading to an orderly approval of the budget.”

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“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.”

Before Finance Minister Enoch Godongwana presented a revised version of the budget before parliament last week, it was postponed last month due to tensions within the ruling coalition over a controversial plan to hike value-added tax (VAT).

Negotiations are underway to try to end the standoff after the modified budget, which reduced the extent of the proposed VAT hike, was officially rejected by the majority of major parliamentary parties.

The updated budget sought to reach a peak in public debt in the fiscal year beginning on April 1st, a goal that Moody’s projected would be maintained in the final version approved by parliament.