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Rand weakens as Moody's highlights concerns over Budget

The local currency had initially strengthened after Finance Minister Tito Mboweni unveiled the plan to cut the public sector wage bill by R160 billion.

Picture: Christa Eybers/EWN

JOHANNESBURG - The rand has continued to fall despite initial optimism with Finance Minister Tito Mboweni's budget.

The local currency had initially strengthened after Mboweni unveiled the plan to cut the public sector wage bill by R160 billion.

This also came with the news that ratings agency Moody's had highlighted a number of concerns following the budget.

Moody's said that risks were still aimed towards a higher debt path given the challenges in increased spending and persistent risks to growth.

It was also concerned about uncertainty surrounding negotiations with unions to reduce the wage bill.

Moody's also said that even if government hits its planned spending restraint, with a deficit of 1.1% of GDP by 2022, this would still be too wide to stabilise the debt burden.

It's the only one of the three major ratings agencies to have South Africa at investment grade.

Moody's is due to review South Africa's credit rating next month.

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