August 22, 2019 / 3:03 PM / 6 months ago

Moody's sees budget cuts as option for South Africa to absorb Eskom costs

A Moody's sign on the 7 World Trade Center tower is photographed in New York, file. REUTERS/Mike Segar

JOHANNESBURG (Reuters) - South Africa is likely to absorb extra financial support for the struggling power utility Eskom with new revenue and expenditure measures in the next mid-year budget review, with departmental budget cuts an option, ratings agency Moody’s said on Thursday.

“In any event, Moody’s sees the government’s room to maneuver as extremely constrained,” Moody’s said in a statement.

Eskom, which supplies more than 90% of the power in Africa’s most industrialised economy, is deep in crisis as its sales decline while debt-servicing costs soar, and is dependent on government bailouts.

It is regularly cited by ratings agencies as one of the main threats to South Africa’s creditworthiness and economic growth.

Reporting by Olivia Kumwenda-Mtambo; Editing by Kevin Liffey

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