South Africa’s budget reverses some of last year’s fiscal deterioration but poor finances of state-owned companies remain a major risk to fiscal targets, ratings agency Fitch said on Friday.
In a budget announced on Wednesday, the Treasury said value-added tax would be raised for the first time in 25 years, part of efforts to cut the deficit and stabilise debt.
“This would represent a partial reversal of recent fiscal deterioration,” Fitch said in a statement.
“Nevertheless, fiscal targets are subject to substantial risks, the largest of which stems from state-owned enterprises, notably the electricity company Eskom, whose medium-term finances are under pressure.”
Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia