Goldman Sachs See Improved Finances as Broadly Credible

On yesterday's budget release, Goldman Sachs write that:

• Godongwana presented improved fiscal deficit projections on the back of somewhat stronger revenue projections and continued expenditure restraint. They view the updated revenue projections as broadly credible, but see some upside risks to expenditure on account of public wages.
• The Eskom debt relief mainly appears below the line. The amount of debt relief granted and the associated detail on timing and modalities in our assessment come as positive surprises to market expectations.
• If their projections on upcoming electricity capacity increases are correct, this should significantly alleviate the need for scheduled power outages and reduce Eskom’s market share in electricity supply over time.