South African markets on edge before budget showdown

By Reuters

South African markets were on edge on Wednesday as the finance minister prepared to present a revised annual budget, with local media reports suggesting there was still no agreement between the two largest political parties.

At 0830 GMT the rand traded at 18.3475 against the dollar , down more than 0.7% on Tuesday’s closing level.

The Johannesburg Stock Exchange’s Top-40 index was down 0.1% and the benchmark 2030 government bond was marginally weaker.

The budget has been the biggest test so far of South Africa’s fractious coalition politics.

It was due out three weeks ago but was postponed at the last minute because of disagreements in the coalition over a plan to hike value-added tax by 2 percentage points to 17%.

Local media have reported that the amended budget is likely to propose a smaller VAT increase, in a concession the finance ministry hopes will help it pass.