JOHANNESBURG: South Africa’s rand weakened on Wednesday, after the national budget was postponed until further notice due to disagreements within the coalition government.
At 1402 GMT, the rand traded at 18.57 against the dollar , down more than 0.9% from its previous close.
After his budget speech was postponed, South Africa’s Finance Minister Enoch Godongwana said that the government would have further discussions and table a new budget in March.
The Democratic Alliance (DA) said the budget had been postponed because of its opposition to an African National Congress (ANC) proposal to increase value-added tax (VAT) by 2 percentage points.
The ANC will need the support of other parties to pass the budget, as it lost its parliamentary majority in an election last year. The DA is its main partner in a coalition government of national unity.
South African rand weakens ahead of budget speech
“There is something seriously wrong when a GNU postpones a National Budget with no warning thereby affecting investor sentiment and undermining citizen’s confidence in the administration,” independent political economy analyst Daniel Silke wrote on X.
Investors were keenly awaiting the budget speech for clues on the coalition government’s fiscal priorities, its plans to tackle debt, and economic reforms.
The delay also triggered the sharpest selloff in the country’s government bonds since December with the 2052 maturity down as much as 1 cent.
On the stock market, the Top-40 index was last down about 0.5%.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 6.5 basis points at 9.19%.
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