Moody’s Investors Service has announced it is too early to know whether the state of the Rand is going to improve before the next rating. The service is in the process of looking for a credible vision for the South African economy. The outcome of the next rating could have an impact on citizens, influencing how much tax is paid and how this might affect debt repayments.
Moody’s vice president and lead sovereign analyst for South Africa Lucie Villa stated that while the outlook might not be positive at the moment, it’s not necessarily negative either. She said that the economic growth data is “not pointing to a positive or a particularly negative direction. There is nothing really to flag for the time being.” On 26th February, Moody’s will be looking at the budget review to see how the government plans to contain spending and boost revenue, according to Villa.
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Economists across the country, such as Absa Bank’s Peter Worthington and Miyelani Maluleke, predict that the value-added tax rate will spike from 15% to 16% in 2020 – 21. This would have a direct impact on the finances of the citizens, making products and services ultimately more expensive.
Although this might make it more difficult for indebted individuals to find funds to get out of their debt, it does not mean that personal debt is inevitable!
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