South Africa’s Coalition Government Signs Up Two More Parties

(Bloomberg) -- Two more South African political parties will join the coalition that’s being formed to govern the country, bringing to nine the members of the next administration.

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The United Democratic Movement and Rise Mzansi agreed to sign up to the so-called government of national unity and to take part in a proposed national dialogue, according separate statements issued by the parties.

Combined with other parties including the African National Congress and the Democratic Alliance, the coalition holds 258 of the 400 seats in parliament. The other parties that agreed to join the government are the Inkatha Freedom Party, the Patriotic Alliance, the GOOD party, the Pan Africanist Congress of Azania and the Freedom Front Plus.

Political parties began talks on Thursday about forming the next cabinet and an announcement on its structure is expected in the coming days. The make-up of the next cabinet is being closely watched by investors anticipating an acceleration of economic reforms under a more centrist-leaning government.

The rand has strengthened 4.6% so far this month as bonds and stocks have rallied on optimism about pro-growth policy continuity.

South Africa’s National Treasury signaled it’s committed to maintaining the stance set out in the 2024 budget that seeks to stabilize public finances, reduce fiscal and economic risks, promote growth and support vulnerable citizens.

“While it is anticipated that the incoming administration will bring its own perspectives and policies, in the interim, it is crucial to maintain the current fiscal strategy,” the Treasury said in a statement on Friday. “Resources will be available only within the parameters required to meet the objectives of the medium-term fiscal strategy as outlined in the 2024 Budget Review.”

South Africa’s budget next year is expected to yield a “debt-stabilizing primary surplus” in the 2025-26 fiscal year, a reduction in the budget deficit to pre-Covid levels, and a stabilization of debt-service costs as a percentage of revenue, the Treasury said.

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