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Treasury ready to defend Budget in meeting with rating agencies

Moodys, which is the only ratings agency that hasn't downgraded South Africa's sovereign debt to junk, has already reacted, saying that the budget highlights government's limited fiscal flexibility.

Finance Minister Tito Mboweni addressing the media on 20 February 2018 in Cape Town. Pictures: Cindy Archillies/EWN

JOHANNESBURG - Finance Minister Tito Mboweni's Budget speech is expected to come under sharp focus when Treasury officials meet with ratings agencies on Thursday.

Mboweni delivered his maiden Budget speech on Wednesday that pledged to give Eskom R69 billion over the next three years, which could increase to R150 billion.

This may result in a backlash from agencies.

* Tito Mboweni’s 2019 Budget speech

Moodys, which is the only ratings agency that hasn't downgraded South Africa's sovereign debt to junk, has already reacted, saying that the budget highlights government's limited fiscal flexibility.

But Treasury Director-General Dondo Mogajane says that it is unfair to say that agencies will "wield the axe".

"We are looking forward to 4pm today, for further engagements with them and also to determine what they have in mind. We also have to believe our own story, that it is strong and solid, based on some true thinking on what exactly is affecting us and what we can do about it."

WATCH: #Budget2019 in 60 seconds with Bruce Whitfield

Economists, meanwhile, say that Mboweni's maiden Budget speech lacked detail on how the economy will be revitalised.

Aside from the Eskom plan, the Finance Minister also announced a clampdown on overtime and bonus payments for civil servants, as well as pay progression.

He also announced that while the president’s salary will increase to R3.9 million this year, government's salary bill must be cut by R27 billion over the next three years.

Political analyst Daniel Silke says the budget was designed to pacify as many constituencies as possible.

“There wasn’t anything that would really stimulate growth in the economy as a result. All we did was tread water.”

Economist Dawie Roodt says the minister's estimates on economic growth is overly optimistic.

“If you look at the numbers, the positive image the minister is putting out is not worn by the numbers. The numbers are negative.”

Wits University Economics lecturer Lumkile Mondi adds: “It’s a Budget that puts the country at potential of a downgrade from Moody’s, because it shows no growth at all.”

Additional reporting from Kevin Brandt.

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