Moody’s sees budget cuts as option for SA to absorb Eskom costs

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 as an option, ratings agency Moody’s said on Thursday.

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

Read: SA to seek budget spending cuts as debt climbs

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.