Debt stress levels in SA show some improvement
made without clear resource plans. “The blockages are in many facets. Unfortunately many of them lie in government.”
In the face of President Jacob Zuma’s emphasis on radical economic transformation, King said this did not necessarily equate to economic growth.
“Economic transformation must happen. Nobody can argue against that. But economic transformation must go with economic growth.” Drain He said a number of stateowned companies continued to drain public finances. “The Auditor-General said irregular expenditure amounted to R46bn in 2016. We can see who the culprits are. The (stateowned companies) are a problem. There are issues with accountability and competence.”
Meanwhile, Craig Pheiffer, chief investment strategist at Absa Stockbrokers and Portfolio Management, said that Gordhan continued to face a tough juggling act between funding the economy’s developmental agenda and toeing the line of fiscal discipline as recommended by global rating agencies.
Gordhan was expected to give an update on, among others, progress on the carbon tax bill, the introduction of the sugar tax, and of the tyre levy, progress on consultations about mining regulatory changes, the minimum wage framework, the reform of the retirement system, given opposition by organised labour, and the National Health Insurance. SOUTH African businesses’ debt stress levels showed a slight improvement in last year’s fourth quarter.
Experian Debt Conditions Index (BDI) yesterday said results for the last quarter in 2016 showed a slight upward adjustment compared to the previous quarter.
The company’s managing director, Simon Russell, said although the reading was still in negative territory, the fourth-quarter change was still a positive development.
“It suggests we may be approaching the turning point of improved business debt stress condition in the next quarters,” Russell said.
“The slight revision also indicates that businesses are managing their finances reasonably well under the current circumstances.” Health indicator The BDI is an indicator of the overall health of businesses and the position of debt settlement between businesses in the economy. The zero line on the index distinguishes between improving and deteriorating business debt stress levels.
BDI said the index recorded -0.0341 during the last quarter compared to -0.0983 in September. It said the index remained below the zero line because of a number of macro-economic factors, including a slowdown in global economic growth in the fourth quarter and stagnant domestic growth.
In the fourth quarter, the average number of debtors’ days declined to 47 points from 49.7 points in Q3 and 49.9 points in Q2 respectively. The Q4 level was the lowest average for any quarter since Q4 2013, and the lowest in three years.
Encouragingly, the ratio of outstanding debtors’ days of more than 90 days to less than 60 days, declined quite sharply in Q4 2016, implying a decline in long-term outstanding debt.
Russell said while these changes in business debt were positive, the macro-economic environment in the fourth quarter was not sufficiently supportive to push the index into positive territory.
“As such, the latest outstanding debtors’ days figures appear to represent the tighter debt terms that are being placed on businesses to pay their dues in a shorter period.” The index showed marginal improvement in the business debt conditions for community services.
The index showed marginal improvement in the business debt conditions for community services and transport. However, agriculture, construction, finance, manufacturing and mining sectors reflected marginal deteriorations.
Russell said there were concerns that domestic and international political volatility could have knock-on effects on business confidence more generally.
“Even so, it would appear as though businesses locally have prepared themselves for such volatility by ensuring relatively solid balance sheets. Up to a point, the BDI tells us that they should be able to survive should this volatility occur,” he said.