(Bloomberg) -- South Africa's rand and bonds weakened after parliament delayed the presentation of the annual budget, an unprecedented decision that highlighted increasing strains in the nation's coalition government.
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"There has not been agreement in terms of parties in the executive to actually find one another in proposals of the budget," Speaker of Parliament Thokozile Didiza told lawmakers in Cape Town on Wednesday.
Finance Minister Enoch Godongwana had been scheduled to deliver his budget at 2 p.m. It will now be presented on March 12, he told reporters at a briefing.
The Democratic Alliance -- the second-biggest party in the ruling coalition -- said earlier on Wednesday that it would hold a briefing after Godongwana's planned speech to discuss its "resolute position" on the budget process after reports that the government is considering raising taxes.
The party said in a separate statement that the minister had planned to increase the value-added tax rate by 2 percentage points to 17%, which it couldn't accept.
The rand fell as much as 1% and traded 0.8% weaker at 18.5533 per dollar by 3:19 p.m. in Johannesburg. The yield on benchmark 2035 government bonds climbed seven basis points to 10.59%.
The last-minute postponement of Godongwana's speech came about because of the failure by the African National Congress, the nation's biggest political party, and Godongwana "to engage meaningfully with the alternative proposals tabled by the DA," said John Steenhuisen, the party's leader. "We will now fight with the same vigor to introduce a new budget that is anchored in growing the economy, rather than increasing taxes or debt."
The 10-party-coalition was formed in June last year, a month after the African National Congress lost its parliamentary majority for the first time since it took power in 1994. While the alliances agreed to prioritize growing the economy, its members have clashed over education policy, a new land expropriation law and the ANC's plans to introduce a national health insurance program.
Brinkmanship
Godongwana's failure to win approval for his planned tax increases are a blow to his efforts to rein in state debt, which he has repeatedly said has reached unsustainable levels.
"I think that this brinkmanship should not be happening," said Rashaad Tayob, portfolio manager and macro strategist at Foord Asset Management. "We don't really agree that a VAT increase is good policy given the need to increase economic growth. Economic growth should be primary policy driver at this point."
ANC Secretary-General Fikile Mbalula played down the rift over the budget. The government of national unity, as the coalition is known, is "not in crisis," he told reporters in Cape Town. The ANC itself is not entirely in support of a VAT increase either, he added.
It's the first time a budget speech has been postponed since at least the end of apartheid in 1994. The government's financial year runs until March 31, meaning new budgetary allocations can still be made in time to avert a funding crisis if agreement can be reached next month.
Journalists were presented with the embargoed budget documentation at 6 a.m. on Wednesday morning, with release slated for when the minister was due to start speaking.
The 10-party-coalition government was formed in June last year, a month after the African National Congress lost in parliamentary majority for the first time since it took power in 1994. While the alliances agreed to prioritize growing the economy, its members have clashed over education policy, a new land expropriation law and the ANC's plans to introduce a national health insurance scheme.
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--With assistance from Rene Vollgraaff, Ntando Thukwana, Robert Brand, Monique Vanek, Mike Cohen and Ana Monteiro.
(Updates with comment by DA from fifth paragraph, latest prices in sixth)