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Fitch issues worrying statement after medium-term budget

Fitch is reading a lack of official steps on how govt plans to curb spending or raise revenue as a sign of deep disagreement within ANC.

This picture taken on 17 January 2012 shows a close-up of a page of the Ratings agency Fitch website. Picture: AFP.

CAPE TOWN - Credit ratings agency Fitch has issued a worrying statement following the medium-term budget.

It warns the lack of a proper plan to increase South Africa's revenue points to disagreements on savings measures within the African National Congress.

In its statement, Fitch notes that government is veering off the path of reducing debt and narrowing the budget deficit and it's doing so at a faster rate than the agency had expected.

Finance Minister Malusi Gigaba announced measures to avoid a R4 billion breach of the spending ceiling.

But Fitch says the very fact that those measures were needed at all, suggests the debt ceiling is not a credible policy tool.

It also weighed in on South Africa's nuclear plans.

Gigaba emphasised on Wednesday that a major nuclear build programme is too expensive to embark on but the agency is looking at the newly appointed energy minister David Mahlobo, who still seems very keen on the project, saying his appointment signals a desire on the part of government to accelerate a programme.

Then there's the issue of how to save money; Fitch is reading a lack of official steps on how government plans to curb spending or raise revenue as a sign of deep disagreement within the ruling party.

The agency does not see the ANC elective conference as a unifying event, indicating it believes these divisions will persist well beyond December.