{"id":1955,"date":"2020-09-10T12:44:18","date_gmt":"2020-09-10T10:44:18","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=432708"},"modified":"2020-09-10T12:44:18","modified_gmt":"2020-09-10T10:44:18","slug":"moodys-sends-warning-over-south-africas-shrinking-tax-base","status":"publish","type":"post","link":"https:\/\/interwebdev.co.za\/index.php\/2020\/09\/10\/moodys-sends-warning-over-south-africas-shrinking-tax-base\/","title":{"rendered":"Moody\u2019s sends warning over South Africa\u2019s shrinking tax base"},"content":{"rendered":"
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The loss in government revenue will be much more severe than South Africa\u2019s fall in economic activity, says ratings agency, Moody\u2019s.<\/p>\n

In a research note on Thursday (10 September), the group cited government\u2019s June supplementary budget review, which projected a decline in main budget revenue to 22.6% in GDP in fiscal year 2020.<\/p>\n

\u201cThe loss in revenue will be much more severe than the fall in economic activity. The smaller tax base stemming from lockdown measures, job losses and lower confidence accounts for the vast majority of the revenue shortfall,\u201d it said.<\/p>\n

\u201cTax-relief measures included in the government\u2019s support package are a secondary driver of the revenue loss.\u201d<\/p>\n

Moody\u2019s said that under-performing revenue has been a key credit challenge in South Africa for an extended period. At the same time, opposition from influential stakeholders including unions has constrained the authorities\u2019 ability to contain spending in response, it said.<\/p>\n

The ratings agency said that the revenue shortfall will further complicate the supplementary budget\u2019s target debt stabilisation by 2023.<\/p>\n

On Tuesday (8 September), StatsSA announced that second-quarter GDP had contracted 16.4% quarter-on-quarter, as lockdown measures weighed heavily on economic activity.<\/p>\n

The mining, manufacturing and construction sectors were the main drag on the GDP growth rate, as production disruptions saw all three record contractions of close or equal to 30% quarter-on-quarter.<\/p>\n

\u201cAlthough we had already factored such a large drop into our full-year growth forecasts, the downturn will nevertheless intensify the government\u2019s fiscal woes, particularly its ability to generate revenue,\u201d said Moody\u2019s.<\/p>\n

\u201cWe also expect the shock will trigger a deterioration in asset quality that will erode the buffers of South Africa banks, which were strong pre-crisis.\u201d<\/p>\n

Moody\u2019s expects the gradual lifting of pandemic-driven restrictions will support a recovery in economic activity in the second half of 2020.<\/p>\n

However, weak consumer and investor confidence, together with renewed load shedding by Eskom will still lead to a 4.2% year-on-year contraction in the second half of 2020, it said.<\/p>\n

\u201cAs a result, we maintain our expectation for a 6.5% recession for the full year. We expect the recovery will persist through 2021 and support growth of 4.5%. However, the South African economy will not return to the 2019 levels of economic activity until 2023.\u201d<\/p>\n

\n

Read: What are the chances of another rate cut in South Africa next week?<\/a><\/strong><\/p>\n

Source: BusinessTech<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The loss in government revenue will be much more severe than South Africa\u2019s fall in economic activity, says ratings agency, Moody\u2019s. In a research note on Thursday (10 September), the group cited government\u2019s June supplementary budget review, which projected a decline in main budget revenue to 22.6% in GDP in fiscal year 2020. \u201cThe loss […]<\/p>\n","protected":false},"author":2,"featured_media":1956,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[77],"tags":[52,53,54,55,56,8,57,59,72,60,61,62,63,64,65,66],"class_list":["post-1955","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-co-za","tag-com","tag-affordable","tag-cheap","tag-cpanel","tag-development","tag-domain","tag-hosting","tag-interweb","tag-joomla","tag-registration","tag-reseller","tag-shared","tag-south-africa","tag-website","tag-wordpress"],"acf":[],"_links":{"self":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/posts\/1955","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/comments?post=1955"}],"version-history":[{"count":0,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/posts\/1955\/revisions"}],"wp:attachment":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/media?parent=1955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/categories?post=1955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/tags?post=1955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}