Picture: REUTERS

Picture: REUTERS

The economy was suffering from a steep collapse in commodity prices, the negative effect of which had been more severe than the benefits obtained from a drop in oil import prices, Moody’s said in a credit analysis report.

“We expect SA’s growth to average less than 2% in 2015-16 as a consequence of our lowered growth forecasts for the global economy,” the report said.

The rating agency said SA needed to address “inadequacies” in the education system, skill shortages, and infrastructure bottlenecks.

While local financial planners seemed to be efficiently managing tax collection and succeeding in stabilising public finances, they were lacking in keeping growth in the wage bill under control, it said.

The Treasury said in a statement earlier on Wednesday that the government was aware of the economic woes, particularly those posed by electricity shortages, and had “made the resolution of the energy challenge an immediate priority”.

The government was also taking steps to speed up the implementation of the structural policy reforms proposed in the National Development Plan, maintaining a prudent fiscal position, and was committed to adhering to set expenditure ceilings while reducing growth of debt, the Treasury said.