SOUTH AFRICA: Treasury Ditches VAT Hike, Seeks Alternative Revenue Sources
Apr-24 06:29
- The National Treasury backed down after weeks of infighting that took the ruling coalition to the brink of collapse and declared last night that it would table a bill scrapping the proposed 0.5pp VAT hike that was supposed to take effect from May 1. It said in a statement that 'the decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees.' As recently as a few days ago, Finance Minister Enoch Godongwana insisted that there were no alternatives to the measure and that it could not be reversed in time. At the same time, the Democratic Alliance (DA) said that the Treasury asked it to drop its lawsuit seeking to indict the implementation of the VAT increase. The party will brief the media at 10:30BST/11:30SAST, while separately the African National Congress (ANC) will be holding a joint media briefing with parties that voted in favour of budget legislation at 09:00BST/10:00SAST
- On the fiscal front, the National Treasury warned that ditching the VAT increase would leave a ZAR75bn revenue gap over the next three years. A source told Daily Maverick that 'without a VAT increase, spending cuts are the only game in town realistically.'
- On the political front, DA Federal Chair Helen Zille confirmed that her party would meet with an ANC delegation today to discuss the budget and 'other matters relating to the [Government of National Unity]'.
- Although all eyes have been on the Treasury's statement, Ukrainian President Volodymyr Zelensky has already touched down in South Africa for an official visit, becoming the first Ukrainian head of state to do so. His talks with President Cyril Ramaphosa are bound to be dominated by Russia's ongoing invasion of his country.
- News24 reported that Trade, Industry and Competition Minister Parks Tau will meet with a US envoy on Friday in the first, informal attempt to address US tariffs. Meanwhile, Agriculture Minister John Steenhuisen said that himself, Tau and Foreign Minister Ronald Lamola are implementing a 'two-pronged approach' of talking to the US while seeking new export markets.
- Finance Minister Enoch Godongwana and SARB Governor Lesetja Kganyago will hold a press conference after a meeting of G20 top economic officials.
- South Africa's March PPI will cross the wires at 10:30BST/11:30SAST.
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LOOK AHEAD: UK Timeline of Events (Times GMT)
Mar-25 06:23
| Date | UK | Period | Event |
| 25-Mar | 1100 | Mar | CBI Distributive Trades |
| 26-Mar | 0700 | Feb | Consumer inflation report |
| 26-Mar | - | - | OBR Spring Forecasts |
| 26-Mar | 1230 | - | Chancellor Reeves to deliver Spring Statement |
| 26-Mar | 1330 | - | DMO to announce FY25/26 financing remit (approx time) |
| 26-Mar | 1530 | Q2 | DMO agenda for quarterly consultation |
| 27-Mar | 0830 | - | BOE's Dhingra on inflation targeting in the UK post pandemic period |
| 28-Mar | 0700 | Feb | Retail Sales |
| 28-Mar | 0700 | Q4 | Current account balance / GDP 2nd est |
| 28-Mar | 0700 | Jan | Trade Balance |
| 31-Mar | 0930 | Jan | BOE Lending to Individuals |
| 31-Mar | - | - | DMO Quarterly Investors/GEMM consultation |
| 01-Apr | 0001 | Mar | BRC Monthly Shop Price Index |
| 01-Apr | 0915 | - | BoE's Greene on ‘UK MP/macro conjuncture’ |
| 01-Apr | 0930 | Mar | Final Manufacturing PMI |
| 03-Apr | 0930 | Mar | Decision Maker Panel data |
| 03-Apr | 0930 | Mar | Services / Composite Final PMI |
| 04-Apr | 0730 | Q2 | DMO announce Apr-Jun issuance operations |
| 04-Apr | 0930 | Mar | S&P Global/CIPS Construction PMI |
LOOK AHEAD: Eurozone Timeline of Key Events (Times GMT)
Mar-25 06:18
| Date | Time | Country | Event |
| 25-Mar | 800 | ES | PPI |
| 25-Mar | 900 | DE | IFO Business Climate Index |
| 25-Mar | 1400 | BE | BNB Business Confidence |
| 26-Mar | 745 | FR | Consumer Sentiment |
| 26-Mar | 800 | ES | GDP (f) |
| 26-Mar | 1800 | EU | ECB's Cipollone in panel on Digital Finance |
| 27-Mar | 900 | EU | M3 |
| 27-Mar | FR | Insee publishes General Govt balance | |
| 27-Mar | 1300 | EU | ECB's De Guindos at 2025 IIF European Summit |
| 27-Mar | 1740 | EU | ECB's Schnabel lecture on MonPol Transmission |
| 27-Mar | 1805 | EU | ECB's Lagarde message for Women in Finance conference |
| 28-Mar | 700 | DE | GFK Consumer Climate |
| 28-Mar | 745 | FR | PPI / Consumer Spending / Flash HICP |
| 28-Mar | 800 | ES | HICP (p) |
| 28-Mar | 830 | EU | ECB de Guindos At Fed. of Female Professionals Conf |
| 28-Mar | 855 | DE | Unemployment |
| 28-Mar | 900 | IT | Business and Consumer confidence |
| 28-Mar | 900 | EU | ECB Consumer Expectations Survey |
| 28-Mar | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 28-Mar | 1100 | IT | PPI |
SCHATZ TECHS: (M5) Corrective Phase Remains Intact
Mar-25 06:15
- RES 4: 107.120 High Mar 4 and key resistance
- RES 3: 106.951 76..4% retracement of the Mar 4 - 6 bear leg
- RES 2: 106.847 61.8% retracement of the Mar 4 - 6 bear leg
- RES 1: 106.805 High Mar 24
- PRICE: 106.790 @ 05:19 GMT Mar 25
- SUP 1: 106.630 Low Mar 18
- SUP 2: 106.540 Low Mar 12
- SUP 3: 106.500 Low Mar 7
- SUP 4: 106.405 Low Mar 6 and the bear trigger
The latest recovery in Schatz futures is considered corrective. The move higher has allowed an oversold trend condition to unwind. Resistance to watch is 106.847, a Fibonacci retracement. The trend condition is bearish. Recent weakness resulted in a breach of key support at 106.735, the Feb 19 low. The break strengthens a bearish theme and signals scope for a deeper sell-off, towards 106.350, a Fibonacci retracement.
