South Africa’s rand falls further after DA says budget talks break down

JOHANNESBURG: The South African rand extended losses on Wednesday after the Democratic Alliance (DA) party said talks with the African National Congress (ANC) over passing the budget had broken down.

The two biggest parties in the ruling coalition have negotiated for weeks to try to reach a deal on the country’s contested budget.

But those talks were yet to yield an agreement less than an hour before parliament was due to start voting on the first piece of legislation associated with the budget, the fiscal framework, on Wednesday afternoon.

“The conversations between the Democratic Alliance and the ANC (have) completely broken down. There is no conversation that is happening, and that is what South Africans must know,” DA spokesperson Karabo Khakhau told local broadcaster Newzroom Afrika.

At 1115 GMT, the rand traded at 18.6475 against the dollar , about 0.7% weaker than Tuesday’s closing level after earlier trading down 1% on the day.

The budget passed a first hurdle in parliament on Tuesday, when the ANC secured the support it needed on a key parliamentary committee despite lawmakers expressing reservations about some of its main revenue-generating measures.

South African rand slips as budget negotiations drag on

The ANC, however, had to rely on a small party outside the coalition to approve the fiscal framework, angering the DA, which said it had crossed a “line in the sand”.

Earlier, the DA joined opposition party the Economic Freedom Fighters in trying to delay the vote on the fiscal framework and revenue proposals.

South Africa’s benchmark 2030 government bond was also weaker, with the yield up 17.5 basis points to 9.28%.