South African rand slides after eleventh-hour national budget delay

Adds analyst comments in paragraphs 6-7, 10-11

By Tannur Anders and Sfundo Parakozov

JOHANNESBURG, Feb 19 (Reuters) - South Africa's rand weakened on Wednesday after the national budget was postponed due to disagreements within the coalition government.

At 1505 GMT, the rand traded at 18.565 against the dollar ZAR=D3, down about 0.9% from its previous close.

After his budget speech was postponed, South Africa's Finance Minister Enoch Godongwana said the government would have further discussions and propose a new budget in March.

The Democratic Alliance (DA) said the budget had been postponed because of its opposition to an African National Congress (ANC) proposal to increase value-added tax (VAT) by 2 percentage points.

The ANC will need the support of other parties to pass the budget as it lost its parliamentary majority in an election last year. The DA is its main partner in the government.

Analysts said the knee-jerk market reaction was not surprising, with current volatility expected to be temporary.

"While this lack of cohesion raises concerns about the government's ability to reach consensus, it is worth noting that the GNU (government of national unity) remains intact and actively negotiating – an indication that the process, however fraught, is still functioning," said Danny Greeff, co-head of Africa at ETM Analytics.

Investors were keenly awaiting the budget speech for clues on the coalition government's fiscal priorities, its plans to tackle debt, and economic reforms.

The delay also triggered the sharpest selloff in the country's government bonds since December with the 2052 dollar bond trading roughly 1 cent lower to be bid at 89.20 cents on the dollar US836205BE37=TE.

Jurgen Eckmann, wealth manager at Consult advisory group, said sentiment could soon recover after Wednesday's market selloff.

"When the budget is finally tabled in March, we will hopefully see a stronger, more balanced budget of consensus," Eckmann said.

On the stock market, the Top-40 .JTOPI index closed down about 0.8%.

South Africa's benchmark 2030 government bond ZAR2030= was weaker, with the yield up 5.5 basis points at 9.18%.