The South African government target to stabilise its ballooning debt by 2023 will be very difficult to achieve and unlikely, ratings agency Moody’s said on Thursday.
The Treasury on Wednesday presented a supplementary budget in response to the coronavirus crisis that projected a wider budget deficit, while public debt was estimated to be more than three quarters of gross domestic product in the medium term.
“In its ‘active scenario’, the government hopes to achieve a primary surplus by fiscal 2023 that would stabilise debt,” Moody’s said in a research note on the budget.
“Given South Africa’s weak track record of fiscal consolidation in recent years and the weak medium-term economic outlook, debt stabilisation by 2023 will be very difficult to achieve.”
The economy was in recession before the COVID-19 outbreak ravaged it, and the lockdown that followed late in March has put further strain on businesses and consumers.
The Treasury projects the economy will contract 7.2% this year.