Moody’s Predicts Budget Compromise from South Africa’s Coalition Government
Moody’s expects South Africa’s coalition government to achieve a budget compromise focused on fiscal consolidation, despite ongoing disputes within the coalition. The initial budget faced postponement over a controversial VAT hike, but a revised version was presented. Negotiations are still ongoing as significant parties oppose aspects of the amended budget.
Moody’s anticipates that South Africa’s coalition government will successfully reach a budget compromise, allowing for the approval of a budget that prioritizes fiscal consolidation. In a commentary dated March 17, Moody’s indicated, “Our baseline is for the GNU (Government of National Unity coalition) to reach a compromise, leading to an orderly approval of the budget.” While conflicts within the coalition suggest possible adjustments to fiscal measures prior to parliamentary approval, the emphasis on fiscal consolidation is expected to persist.
The budget was initially postponed last month due to disputes among coalition members over a debated increase in value-added tax (VAT). Finance Minister Enoch Godongwana later introduced a revised budget in parliament. Despite the scaled-back VAT increase, significant parliamentary parties have expressed public opposition, prompting ongoing negotiations to resolve the deadlock.
The primary aim of the revised budget is to ensure that public debt peaks during the forthcoming fiscal year beginning on April 1. Moody’s has predicted that this goal will be maintained in whatever version of the budget ultimately receives parliamentary approval.
In summary, Moody’s predicts a resolution within South Africa’s coalition government concerning the budget, emphasizing a continued focus on fiscal consolidation. Although disagreements have led to delays and modifications regarding the VAT increase, the revised budget’s primary objectives, particularly regarding public debt, are likely to be upheld.
Original Source: money.usnews.com
