South Africa’s Budget Delay Weighs on Rand’s Value

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In a development that has shaken financial markets, South Africa’s parliament has delayed its annual budget presentation due to political disagreements within the coalition government. Speaker Thokozile Didiza confirmed that key parties were unable to agree on budget proposals, raising concerns about governance stability.

This postponement caused the rand to drop by up to 1% against the US dollar, while government bond yields increased. It is the first time since the end of apartheid in 1994 that a budget speech has been delayed, heightening uncertainty for investors.

One of the contentious issues is a proposed two-percentage-point hike in the VAT rate, which the Democratic Alliance, the coalition’s second-largest party, strongly opposes. The impasse highlights growing tensions within the coalition that has been in power since June last year.

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The budget is now set to be presented on March 12. However, this delay has already sparked doubts about the government’s ability to tackle South Africa’s economic issues. If political conflicts continue, investor confidence in the country’s fiscal management may further decline.