Debt stress lev­els in SA show some im­prove­ment

The Star Late Edition - - COMPANIES - Joseph Booy­sen

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.

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