South Africa tightens its belt

Oct 25, 2012, 1:31 PM EDT
South African Minister of Finance Pravin Gordhan delivers the Midterm Budget statement at the National Assembly in Parliament, on October 25, 2012, in Cape Town. The South African economy has been rocked by a spate of wildcat strikes in the mining industry. International ratings agencies, Moodys and Standard & Poors have recently downgraded South Africas sovereign economic ratings.

South Africa's finance minister, Pravin Gordhan, outlined a three-year budget policy that will restrain spending to restore confidence in Africa's largest economy in the face of widespread labor unrest, rating downgrades and growing budget deficits. Gordhan didn't raise government spending targets for the first time since 1998 and confirmed that he would not change baseline public spending targets announced in February. The rand rose 1.2% after Gordhan's speech, to 8.682 to the U.S. dollar. The yield on the benchmark rand bond rose 1 basis point to 5.48%.