Bonds firmer on hopes of greater fiscal consolidation in Wednesday’s budget
South African government bonds were firmer at midday on Monday, as the market rally extended further. This followed the possibility of a budget on Wednesday that reflected renewed fiscal consolidation after President Cyril Ramaphosa’s state of the nation address on Friday.Fiscal consolidation entails fiscal contraction and a lower budget deficit, as well as a curtailment in government debt growth.Fiscal consolidation was government policy before Finance Minister Pravin Gordhan was fired by then president Jacob Zuma in March 2017. Before that the government had pursued a counter-cyclical policy."Fiscal consolidation was postponed with last year’s medium-term budget policy statement, as the consolidated budget deficit would rise to 4.3% from 3.4%," Investec chief economist Annabel Bishop said.The 2018 budget on Wednesday needed to implement material revenue and, particularly, expenditure side adjustments to achieve fiscal consolidation over the medium-term, Bishop said.In his state of...
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