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<\/a><\/p>\nMoody\u2019s, which is reviewing South Africa\u2019s Baa3 credit rating next month, said the government will find it hard to achieve spending cuts mooted in the budget, which include a reduction in the wage bill that\u2019s opposed by labour unions.<\/p>\n
Finance Minister Tito Mboweni said on Wednesday government debt will continue to climb even with the spending cuts as weak economic growth curbs tax collections.<\/p>\n
South Africa\u2019s budget deficit as a percentage of GDP is set to widen to 6.8% in the fiscal year ending March 2021.<\/p>\n
That\u2019s the highest since 1992-93, when the gap was 7.2%, and compares with a forecast of 6.5% in October\u2019s medium-term budget policy statement.<\/p>\n
\u201cAll told, the package is unlikely to be sufficient to convince Moody\u2019s,\u201d said Elisabeth Andreae, a Frankfurt-based currency and emerging-market analyst at Commerzbank AG, in a note to clients.<\/p>\n
\u201cWe therefore continue to consider a rating downgrade to junk at the review in March to be likely.\u201d The rand will remain \u201cunder depreciation pressure,\u201d she said.<\/p>\n
The rand declined as much as 1% on Friday before paring the decline to trade 0.5% down at R15.56 per U.S. dollar by 09h26 in Johannesburg.<\/p>\n
That\u2019s its weakest on a closing basis since June 2016.<\/p>\n
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