South Africa’s poor economic performance is the biggest impediment to stabilising its debt situation, said ratings agency Fitch in a company note.
Fitch’s comments came after Finance Minister Pravin Gordhan delivered South Africa’s 20th medium-term budget policy statement in Parliament on Wednesday, announcing reduced expenditure and new revenue raising measures in the next financial year.
In his speech, Gordhan revised GDP growth downwards to 0.5% for the year, while adjusting the deficit to GDP upwards – from 3.2% in February to 3.4% in the medium-term.
“The adjustment reflects slower than expected revenue growth as a result of weaker GDP growth and tax buoyancy, following disappointing tax data for the first five months of 2016/17,” Fitch said.