* Contraction in revenues putting stress on government
* Moody's to release review after next week's budget (Adds treasury official's comments on ratings, analyst)By Wendell RoelfCAPE TOWN, Oct 16 (Reuters) - Falling revenues and arecession mean South Africa will struggle to finance the publicservices that form the largest part of its budget, the NationalTreasury said on Tuesday.Africa's most industrialised economy slipped into recessionin the second quarter for the first time in nearly a decade andfaced political uncertainty that caused turmoil in its currencyand financial markets over its finance minister.Next week's medium term budget, to be delivered by the newfinance minister, Tito Mboweni, will be closely watched fordetails of President Cyril Ramaphosa's stimulus plan to pull theeconomy out of recession and avoid further ratings downgrades."The contraction of our public finances is placingtremendous stress on us and our ability to finance publicservices and this threatens the affordability of plannedexpenditure," Treasury's Director-General Dondo Mogajane told aparliamentary committee.National debt is approaching 2.5 trillion rand ($175billion), with debt seen at 60 percent of gross domestic productin 2020, as debts of state firms, particularly Eskom, increaserapidly while tax revenues plummet.The Treasury has also warned of a shortfall in revenuecollection in the current fiscal year after a 50.8 million gapin 2017/18, the financial year ended in March .President Ramaphosa announced a multi-billion-dollarstimulus programme on Friday, earmarking funds for job creationand infrastructure development as he seeks to make good on apledge to revive the country's ailing economy.
And while his appointment of Mboweni as the country's fourthfinance minister in two years, replacing Nhlanhla Nene, was wellreceived by investors, there are still doubts over his abilityto deliver growth ."The MTBPS will be calm on the surface but hide some furious'kicking' below the surface to hold the line against revenueunderperformance and the political pressures for a 'real'stimulus," said analyst Peter Attard Montalto of Intellidex.Moody's, the last of the top three agencies to still ratethe country investment grade, said in September that while itdid not expect to downgrade the country to junk status, the sizeof the plan announced by Ramaphosa would have little impact. Mogajane said the expects Moody's to release its ratingsreview after next week's medium term budget policy statement.The agency did not publish the review on Friday as was widelyexpected.
($1 = 14.2951 rand) (Writing by Mfuneko Toyana; editing by James Macharia, LarryKing)