24 Oct 2018 Mid-term budget address by Finance Minister Tito Mboweni – will Moody’s trust him enough?
Finance Minister Tito Mboweni delivered his medium-term budget policy statement in parliament today and here’s some insights from Gerhard Lampen, Head of Sanlam iTrade.
“The higher budget deficit and gross debt figures are very negative and can easily give rating agency Moody’s reason to downgrade South Africa, even if only the outlook from stable to negative (which means we remain investment grade).
We’ve had so many finance ministers shifting the goalposts that saying Government remains committed to fiscal sustainability is starting to sound rather hollow. However, we now have a new finance minister, and Tito Mboweni has built a strong reputation of meeting his targets and promises as Reserve Bank Governor.
He has demonstrated that he is far from being a populist, by committing Government to the ‘user pays’ principle. This probably means that e-tolls are here to stay, very unpopular. His strong stance in favour of keeping national wage ceilings steady and not allocating more money for the excess of R30 billion resulting from the public service wage agreement, shows a strong commitment to fiscal discipline. Any other person would have struggled to be as convincing as Tito Mboweni, but he may just pull it off because of his reputation and the respect he enjoys.
Let’s hope Moody’s agrees.”
Head, Sanlam iTrade