(Bloomberg) — Ten South African political parties agreed to form a ruling alliance, completing the first phase of creating a so-called national unity government.
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The Al Jama-ah party joined nine others on Saturday to create a government that will rule the country for the next five years. The government is excluding the left-wing Economic Freedom Fighters and former President Jacob Zuma’s uMkhonto weSizwe party, which together won almost a quarter of the vote in last month’s election.
The addition of any new parties to the government will be subject to the consent of the founding members, the African National Congress said in a statement on Saturday.
“The ANC remains in open communication with the parties that have not joined the GNU, and is exploring various ways in which cooperation can take place,” the report said.
The ANC has been forced to form a coalition with rival parties after losing its parliamentary majority in the May 29 elections for the first time in three decades in power. With 40.2% of the vote, it is the largest party in the new government, followed by the centrist Democratic Alliance, which gained 21.8%.
Combined, the coalition parties hold 287 of the 400 seats in parliament. The other members are the Inkatha Freedom Party, the Patriotic Alliance, the Freedom Front Plus, the United Democratic Movement, Rise Mzansi, the GOOD party and the Pan-African Congress of Azania.
Political parties began discussions on Thursday on the formation of the next cabinet and an announcement on its structure will be made “in the coming days”, the ANC said on Saturday.
The composition of the executive branch is being closely watched by investors who anticipate an acceleration of economic reforms under a more centrist-oriented government. The rand is up 4.6% so far this month as bonds and shares rallied on optimism about the continuity of pro-growth policies.
South Africa’s National Treasury said on Friday it is committed to maintaining the 2024 budget position, which aims to stabilize public finances, reduce fiscal and economic risks, promote growth and protect vulnerable citizens. to support.
“While it is expected that the new government will come up with its own perspectives and policies, in the meantime it is crucial to maintain the current fiscal strategy,” the Finance Ministry said in a statement on Friday. “The resources will only be available within the parameters necessary to achieve the objectives of the medium-term fiscal strategy as set out in the 2024 Budget Review.”
South Africa’s budget next year is expected to deliver a “debt stabilizing primary surplus” in the 2025-2026 financial year, a reduction in the budget deficit to pre-Covid-19 crisis levels, and a stabilization of debt service costs as a percentage of revenue. , the Ministry of Finance said.
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