The head of South Africa\u2019s second-biggest political party said talks about the nation\u2019s revamped budget are \u201care going very, very well,\u201d a signal that the coalition government is resolving differences that derailed the National Treasury\u2019s previous tax and spending proposals. <\/p>\n\n\n\n
\u201cWe had a wonderful presentation by the minister of finance,\u201d on a third iteration of the budget, Democratic Alliance leader John Steenhuisen told reporters at the Nampo Harvest Day expo in the central Free State province on Friday. \u201cI think we\u2019re certainly getting there.\u201d<\/p>\n\n\n\n
\u201cThere really a sense of collaboration and working together to put on the table a credible budget that will be a strong stable platform for us to go out and seek confidence from our investors and also to start growing the economy and creating jobs here in South Africa,\u201d he added. <\/p>\n\n\n\n
Steenhuisen\u2019s comments follow an assertion by Deputy Finance Minister David Masondo, on Thursday that he is \u201cvery confident that we\u2019re not going to have budget 4.0,\u201d and that lawmakers will approve the proposals in parliament on 21 May.<\/p>\n\n\n\n
Last year\u2019s election failed to produce an outright winner, with the African National Congress setting up a 10-party coalition in June, a month the vote in which it lost parliamentary majority it had held since apartheid ended in 1994. <\/p>\n\n\n\n
The DA and African National Congress have since February sparred over issues including the National Treasury\u2019s proposal to hike value-added tax \u2014 all of which raised questions about the alliance\u2019s durability. <\/p>\n\n\n\n
Tensions escalated last month, when the ANC enlisted the backing of parties that aren\u2019t part of the coalition to pass the fiscal framework \u2014 legislation that underpins the budget \u2014 after the DA withheld its support. The DA then filed a lawsuit contesting the adoption of the legislation on procedural grounds.<\/p>\n\n\n\n
The Treasury backed down, saying it would scrap the planned VAT hike and cut spending to fill a R75 billion gap in the budget over the next three years, and seek to settle the court case with the DA.\u00a0<\/p>\n\n\n\n
The rand surged to its strongest level against the dollar in two months and government bond yields fell after Masondo said an announcement on the country\u2019s inflation-targeting regime is imminent.<\/p>\n\n\n\n
The South African Reserve Bank and National Treasury are \u201cworking very hard to establish the appropriate inflation framework\u201d and an announcement would be made \u201cvery soon,\u201d he said at an investor conference in Cape Town.<\/p>\n\n\n\n
The rand jumped as much as 1.1%, leading emerging-market currency gains, on expectations that a lower inflation target would keep monetary policy tighter for longer to put a brake on price increases. <\/p>\n\n\n\n
The yield on benchmark 2035 bonds fell seven basis points to the lowest since early March.<\/p>\n\n\n\n
\u201cA lower inflation target will imply real rates remain higher than would otherwise have been the case, which is rand-supportive,\u201d said Mamokete Lijane, global markets strategist at Standard Bank Group Ltd.<\/p>\n\n\n\n
\u201cAlso, the expectation would be that there would be inflows into government bonds which is supportive of capital inflows.\u201d<\/p>\n\n\n\n
The Treasury and SARB have been in talks on a new inflation framework since February 2024. The current target band is 3% to 6%, with a preference for price growth to be anchored at the midpoint. <\/p>\n\n\n\n
Central bank Governor Lesetja Kganyago has advocated a single-point inflation target of 3%, which would be more in line with South Africa\u2019s peers.<\/p>\n","protected":false},"excerpt":{"rendered":"
Significant progress has been made in preparing the third budget for South Africa next week, with parties in the GNU finding each other at long last.<\/p>\n","protected":false},"author":59,"featured_media":812962,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13716],"tags":[1629,1329,20273,17448],"class_list":["post-824384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget-speech","tag-budget","tag-da","tag-david-masondo","tag-enoch-godongwana"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=824384"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824384\/revisions"}],"predecessor-version":[{"id":824389,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824384\/revisions\/824389"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812962"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=824384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=824384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=824384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}