The Standing Committee on Finance has reportedly adopted the fiscal framework, albeit with “recommendations”. This implies that the budget looks set to be passed today, although it remains unclear how the DA will vote. This notwithstanding, there appears to be a coalescing agreement among the ANC, Action SA, and Build One SA to ensure its passage. Should the ANC rely on parties outside the GNU to secure this outcome, it could undermine the coalition’s existence. Notably, the budget has evolved considerably from its initial draft, now resting on three forward-looking pillars that promise meaningful progress.

The first pillar emphasises enhanced private-sector involvement in state-owned enterprises, necessitating reforms in rail, ports, and energy. This shift could unlock foreign investment, bolstering South Africa’s economic appeal. Additionally, a renewed focus on digital transformation—spearheaded by the private sector—will accompany a review of the Public Procurement Act. The second pillar entails a thorough evaluation of government expenditure, including potential programme cuts, closures, or delays, alongside an audit to eliminate ghost employees across government and SOEs. Critical investments in policing, healthcare, and education will remain safeguarded. The third pillar targets a reduction in regulatory burdens, fostering a more business-friendly environment. All three make sense and will enjoy widespread support. Regrettably, their delayed implementation prior to the budget’s tabling missed an opportunity to offset the need for a VAT increase—a risky move in a growth-starved economy.

ZAR Markets

Ahead of today’s budget vote, the ZAR has come under significant pressure as investors question whether the ANC’s decision to work around the DA and negotiate a deal with parties outside the GNU could threaten the coalition’s existence. Trading north of 18.5000 this morning, the USD-ZAR is testing a break out of its downtrend since mid-January. Should this break be sustained, the market will likely see fresh topside impetus and need to find new technical guidelines to trade on. Looking beyond local developments, investors will also need to navigate fresh Trump tariffs today as his administration plans to roll out sweeping reciprocal tariffs. While these tariffs could lead to inflationary pressures and slower economic growth, they are being used as a negotiation tool to get to freer trade all round. Nevertheless, there is extreme uncertainty around the announcement, which could drive global market volatility.

Global FX Markets
The dollar is underpinned while other currencies remained stable as markets awaited details of U.S. President Donald Trump’s tariff plans. The euro and sterling were little changed, the dollar edged up against the yen, while the Australian and New Zealand dollars showed minimal movement. with traders awaiting the White House announcement that could introduce significant new duties, potentially disrupting global trade. Trump has promoted April 2 as “Liberation Day,” with tariffs expected to take effect immediately. Reports suggest Trump’s administration may impose a blanket 20% tariff on imports rather than targeting specific countries or products. While the jury is still out as to what this ultimately means for the U.S. dollar, concerns persist about potential stagflation and recession risks which has been reflected in the dollar posting its worst monthly performance since November 2022 in March.