Ratings agencies to watch SA after Nene's budget
The finance minister announced an increase in personal income tax rates in his first budget speech.
CAPE TOWN - With Finance Minister Nhlanhla Nene's maiden budget speech done and dusted, rating agencies will be watching South Africa closely over the next six to 12 months, as the country battles major energy constraints and a cut in growth forecast.
Delivering his speech in Parliament on Wedensday, the minister said the electricity crisis is the most significant issue holding back the economy.
Nene said that if Eskom isn't able to sustain power generation, government will consider converting its R23 billion loan into equity.
"If further support is deemed necessary, consideration will be given to an equity conversion of government's subordinated load to Eskom."
'GOVT CAN'T BALANCE ITS BOOKS'
Some opposition Members of Parliament (MPs) say the minister could've avoided raising personal income tax rates and the fact that he had to is proof government can't balance its books.
On the other hand, Economic Freedom Fighters (EFF) have criticised government for not increasing company tax.
Nene also announced that the general fuel levy, the electricity levy, and excise duties will go up.
The Democratic Alliance (DA) believes tax increases could have been avoided if the minister cut wasteful expenditure.
Freedom Front Plus (FF+) leader Pieter Mulder has lamented government's decision to raise personal income tax.
"If they must raise taxes, surely I would've gone for VAT because one percent on VAT would have brought in R18 billion to R20 billion, solving our problem. Now, you target a very small group of people that have already been milking the cow until there's nothing left."
The African Christian Democratic Party (ACDP)'s Steve Swart says government should cut the cost of corruption.
"Rather look at corrupt and wasteful expenditure of R30 billion per year."
The EFF's Julius Malema has accused the African National Congress (ANC)-led government of favouring big business over the poor, by choosing not to raise corporate tax.
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ETOLLS: 'THIS IS NOT A COMPROMISE'
On the contentious issue of e-tolling, Nene announced that government remains committed to the user pay principle.
He however says tariffs will decrease to ease the burden on motorists.
"This is not a compromise. We cannot table a budget when there is a matter that poses a threat to the South African National Roads Agency Limited (Sanral)'s situation without indicating that government stands behind its institution; not behind the noise out there but behind Sanral in order to make sure that going forward, this institution is able to discharge its responsibilities."
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