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Fitch says South Africa’s budget partly reverses fiscal deterioration

By Staff Writer 26 Feb 2018 1 Min Read Save

Last updated: 26 Feb 2018, 10:40

The headquarters of Fitch Ratings Ltd. stands in the Canary Wharf business and shopping district in London, U.K., on Friday, July 12, 2013. Recent data suggest Britain's economic recovery is gaining momentum after a return to growth in the first quarter. Photographer: Simon Dawson/Bloomberg via Getty Images

JOHANNESBURG – South Africa’s budget reverses some of last year’s fiscal deterioration but poor finances of state-owned companies remain a major risk to fiscal targets, ratings agency Fitch said on Friday.

In a budget announced on Wednesday, the Treasury said value-added tax would be raised for the first time in 25 years, part of efforts to cut the deficit and stabilise debt.

“This would represent a partial reversal of recent fiscal deterioration,” Fitch said in a statement.

“Nevertheless, fiscal targets are subject to substantial risks, the largest of which stems from state-owned enterprises, notably the electricity company Eskom, whose medium-term finances are under pressure.”

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