Bad news for Godongwana’s new budget, and RAF is collapsing

On Monday, South Africa’s rand strengthened following soft economic data from the U.S. and in anticipation of a week filled with important information.

Investors appeared unfazed by the return of rolling blackouts in Africa’s most industrialised economy.

The rand was trading at 18.38 against the U.S. dollar, approximately 0.4% stronger than its closing level on Friday. The dollar was about 0.1% stronger against a basket of currencies.

According to Warren Venketas, trading services manager at IG Group, the rand’s recent appreciation against the dollar has been primarily influenced by U.S.-specific factors, including lacklustre economic data and uncertainty surrounding tariffs.

On Tuesday (25 February), the rand strengthened slightly, trading at R18.37 to the dollar, R23.21 to the pound and R19.24 to the euro. Oil is trading lower at $75.22 a barrel.

Here are five other news stories making waves in South Africa today:

Godongwana’s revised Budget rejected: During a special meeting in Cape Town on Monday, Finance Minister Enoch Godongwana presented an alternative budget that excluded the proposed 2% VAT increase to Cabinet. However, President Cyril Ramaphosa’s Cabinet rejected Godongwana’s revised budget, stating that it was not feasible. [News24]

RAF collapsing: The Road Accident Fund (RAF) is facing collapse and has been criticised by the High Court for mishandling claims from road accident victims. Judge Soraya Hassim noted that the RAF’s survival depends on a moratorium on the execution of writs and warrants related to capital and interest. [Moneyweb]

Luxury tax on the cards: following the backlash over the intention to increase VAT, the Cabinet re-looked at the Treasury’s draft budget which suggested exploring progressive taxes on luxury items and wealth to ease fiscal pressure without harming low-income households. SARS is collecting relevant data, but no decision has been made yet. [Business Day]

Lesufi highlights key issues to be addressed: Gauteng Premier Panyaza Lesufi highlighted six critical issues the government must tackle: water shortages, cable theft, vandalism, non-functional traffic lights, potholes, and crime. At the State of the Province address in Pretoria, he stated, “If we don’t resolve these problems, being here will mean nothing.” [TimesLive]

Load shedding reduced to stage 2: Eskom has announced that stage 4 load shedding will continue until Tuesday morning, after which it will be downgraded to stage 2. The utility noted that load shedding will continue until further notice. [BusinessTech]