Peter Bruce Columnist

Trevor Manuel was right. The markets are amorphous. After new finance minister Tito Mboweni's first medium-term budget policy statement last week, the rand fell sharply and the yield on South African government bonds maturing in 2026 rose to almost the highest level in a year, at 9.31%.

That last bit is the market signalling displeasure. Bond yields rise when bond prices fall. Mboweni was signalling that we were already in too much debt and would need more debt to get out of the "debt trap" beginning to enclose us. The "market" was saying: "Sure, Governor, we'll buy your bonds but we want to pay less for them and we want the same returns."

It would be naïve to expect less, I suppose. But we're traded by algorithms. It almost gives one hope, in the face of encroaching artificial intelligence. If the markets can't see the emerging political strength of President Cyril Ramaphosa now, and analyse what that might promise, maybe they never will.

And if the markets are too thick to see what a combination Ramaphosa and Mboweni might become, then my advice is to start betting against them. Out of nowhere, out of the crisis that suddenly felled Nhlanhla Nene, steps Mboweni to stick a rod up the presidential back and to suddenly make the political ordeal of fiscal consolidation (cutting our debt) perfectly achievable. The primary obstacle to cutting our debt isn't economic. It's political. It's greedy, useless ministers and officials threatened by the removal from office of Jacob Zuma. They, in turn, threaten to upset the political balance in the ruling ANC's national executive committee should their largely redundant ministries or budgets be touched by the cold hands of closure or austerity. It has been a political problem for Ramaphosa. It isn't going to be any kind of problem for Mboweni. I have to be careful what I say about Ramaphosa. I am not his imbongi. He has, in my view, some serious weaknesses as the leader of a compl...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now