South Africa’s economic future looks grim according to leading economists and leaders from the business community, who say urgent intervention was needed by government.
On Friday, ratings agency Moody’s kept the country one notch above investment grade but changed the outlook from stable to negative.
The announcement came on the back of Finance Minister Tito Mboweni’s Medium-Term Budget Policy Statement last week.
On Friday, the ratings agency indicated obstacles posed by high unemployment, income inequality, social and political challenges were proving to be more severe than expected.
Business Leadership South Africa’s Busisiwe Mavuso said it’s clear what government needed to do.
“Now a decision is going to have to be very clear from the government on whether we really need to continue owning 100% of these [state-owned entities], especially the ones that are the biggest drain on the fiscus.”
Political analyst Lumkile Mondi agrees: “We are hoping that the [African National Congress] and its alliance partners will come to an agreement about a very credible economic plan.
The negative outlook meant there was a window of 12 to 18 months in which a downgrade could be delivered but it could come sooner if Moody’s wasn’t impressed by the fiscal picture presented by the Finance Minister in his budget in February.
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