Despite consultations between GNU partners, the revised budget fell short of expectations, offering no bold measures to address South Africa’s economic challenges. The ANC remains ideologically committed to state-driven growth, raising the VAT rate without adjusting income tax brackets for inflation. The budget also lacked growth-stimulating initiatives and failed to address inefficiencies within state-owned entities (SOEs) and local governments.

The ANC may struggle to secure sufficient support for the budget, even with backing from the IFP, likely leading to revisions, but in its current form, it does little to support the South African Rand (ZAR).

In the face of rising global headwinds, the gold price has surged to a new all-time high, which may bolster the ZAR’s resilience in the coming weeks in the face of increased risk aversion.