South Africa’s 10-year bond yield rose to 10.75%, its highest since June 2024, amid political instability following a revised budget presented by Finance Minister Enoch Godongwana. Major political parties rejected the budget despite a VAT reduction. This situation is exacerbated by the ANC’s lack of a parliamentary majority, necessitating support from other parties for the budget to pass.
South Africa’s 10-year government bond yield has reached approximately 10.75%, marking its highest point since early June 2024. This increase comes as investors monitor the budget presentation and ongoing political uncertainties closely.
During today’s budget presentation, Finance Minister Enoch Godongwana introduced a revised budget that was immediately rejected by major political parties. This resistance occurred despite a significant reduction in the proposed increase to the value-added tax (VAT), which was a focal point of contention.
Originally, the budget, which was due in February, faced an unprecedented postponement due to discord within the Government of National Unity (GNU), particularly surrounding the suggested two-percentage-point VAT increase. This conflict has escalated tensions within the GNU, undermining investor confidence built around their pro-business policies aimed at fostering economic growth.
Given the African National Congress (ANC) does not hold a majority in parliament, the proposed budget bill will necessitate cooperation from other political parties to secure passage.
In summary, South Africa’s 10-year bond yield has reached a nine-month high, driven by political tensions surrounding the revised budget presented by Finance Minister Enoch Godongwana. The immediate rejection of the budget by key political entities reflects ongoing discontent within the Government of National Unity, particularly concerning proposed tax increases. The ability to enact this budget will be contingent on garnering support from various political factions, as the ANC lacks a parliamentary majority.
Original Source: www.tradingview.com
