South Africa’s 10-year bond yield has hit a nine-month high at 10.75%. The yield rise correlates with a rejected revised budget by Finance Minister Godongwana, amid ongoing political tensions. Disagreements within the Government of National Unity (GNU) over VAT increase proposals have heightened investor concern, further complicating the legislative process as ANC lacks a parliamentary majority.
South Africa’s 10-year government bond yield has risen to 10.75%, marking its highest point since early June 2024. This increase reflects investor caution as they evaluate the recent budget presentation and ongoing political instability within the country.
Finance Minister Enoch Godongwana introduced a revised budget that was met with immediate rejection by significant political parties. This response occurred despite a notable reduction in the initially proposed increase in value-added tax (VAT), which spurred further political contention.
Originally set for February, the budget proposal faced an unprecedented delay due to disagreements among members of the Government of National Unity (GNU), particularly regarding a proposed two-percentage-point increase in VAT. This internal conflict has strained relations within the GNU, previously perceived positively by investors due to its pro-business growth initiatives.
The African National Congress (ANC) is currently lacking a parliamentary majority, making it crucial for the bill to secure support from opposition parties for successful passage.
In summary, South Africa’s 10-year bond yield has reached a nine-month peak at 10.75%. The recent budget presentation by Finance Minister Godongwana faced immediate backlash from significant political factions, exacerbated by prior delays due to internal disputes over tax policy. This situation illustrates the political challenges that could impact economic stability and investor confidence moving forward.
Original Source: www.tradingview.com
