JOHANNESBURG – The rand fell sharply after South African Finance Minister Tito Mboweni forecast wider budget deficits and higher debt during his medium-term budget policy statement on Wednesday.
At 4pm, the domestic currency was at 14.99 to the dollar, 1.2 percent weaker than its previous close.
Mboweni projected a budget deficit equal to 5.9% of gross domestic product this fiscal year, higher than a February forecast of 4.5% of GDP.
He also said national debt was increasing at an unsustainable rate and that the government had identified spending cuts of 21 billion rand in 2020/21 and an additional 29 billion rand in 2021/2022 to help stabilize debt.
Africa’s most industrialised economy is battling to kick-start economic growth, and investor sentiment is fragile.