Finance Minister Tito Mboweni’s first major policy statement since returning to the cabinet almost halved the Treasury’s growth forecast, while predicting a steady increase in debt and borrowing that may attract unwelcome interest from ratings agencies.

The immediate market reaction was negative, pushing the rand down as much as 1.46% to R14.46 to the dollar, while the yield, which moves inversely to the price, on the government bond maturing in 2026 increased eight basis points, to 9.14%. The increase in bond yields reflects the reality of higher supply in coming years as the government grapples with debt levels that will peak later than it had anticipated and at higher levels. In an echo of President Cyril Ramaphosa earlier in 2018, Mboweni also tried to strike an optimistic tone, even as he acknowledged the grim economic reality, saying the statement was “built on a strong conviction that SA can be renewed”...

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