South Africa’s rand and bonds weakened after parliament delayed the presentation of the annual budget, an unprecedented decision that highlighted increasing strains in the nation’s coalition government.
“There has not been agreement in terms of parties in the executive to find one another in proposals of the budget,” Speaker of Parliament Thokozile Didiza told lawmakers on Wednesday.
Finance Minister Enoch Godongwana had been scheduled to present his budget at 2 p.m.
Earlier, the Democratic Alliance said it would hold a briefing later on Wednesday to discuss its “resolute position” on the budget process after reports that the government is considering increasing taxes.
An increase of as much as a two percentage points increase in the VAT rate, currently at 15%, was budgeted for.
The government will hold an urgent media briefing at 3 p.m., according to the Government Communication and Information System.
The rand extended an earlier decline, weakening as much as 1% to 18.5892 per dollar by 2:32 p.m. The yield on benchmark 2035 government bonds climbed 11 basis points to 10.63%.
It’s the first time a budget speech has been postponed since at least the end of apartheid in 1994.
Journalists were presented with the embargoed budget documentation at 6 a.m. on Wednesday, with release slated for when the minister was due to start speaking.
The 10-party coalition government was formed in June last year, a month after the African National Congress lost the parliamentary majority for the first time since it took power in 1994.
While the alliances agreed to prioritize growing the economy, its members have clashed over education policy, a new land expropriation law and the ANC’s plans to introduce a national health insurance scheme.
BLOOMBERG