Economists say reprioritising spending will help government to stabilise public finances and prevent further ratings downgrades.
President Cyril Ramaphosa unveiled an economic recovery plan on Friday. He fell short of announcing a stimulus package, saying there was no room for increased spending or borrowing.
One of the plan’s main features is a more than R400 billion for infrastructure development to be financed by a private-public partnership.
Chief economist at Standard Bank Goolam Ballim says, “South Africa can’t afford further borrowing and therefore reprioritisation is critical in the sense that government is simply going to shift existing revenue expectations around.”
“It is going to alter its existing expenditure profile without necessarily engaging new borrowing and that’s critical quite simply because South Africa risks falling into sub-investment status through the lens of Moody’s, the rating agency,” He adds.
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