At 0645 GMT, the rand was 0.1% weaker at 16.4450 per dollar, slightly better than this week's low of 16.4950 that it hit on Wednesday after the finance minister announced that a public sector wage freeze and other spending cuts were planned to revive growth.
The economy is seen contracting 7.8% in 2020, while gross debt is likely to peak at more than 95% of GDP in 2025/26, a higher level than aimed for in an emergency coronavirus budget in June, Finance Minister Tito Mboweni said. To narrow the deficit, forecast at 15.7%, the Treasury is seeking nearly 311 billion rand ($19 billion) in wage bill reductions.
Unions have already voiced opposition to the salary freeze, while ratings firm Fitch said on Thursday the government would struggle to push through the plan.
"SA's juicy real yields make it an attractive prospect for carry trades, which will continue to support the ZAR in the near term. However, it is difficult to hold a bullish outlook for the ZAR further out into the future," said economists at ETM Analytics.
"The lack of urgency seen in Wednesday's MTBPS and the subsequent reaction from SA's politically influential labour unions have raised major red flags for the country's long-run fiscal sustainability."
Bonds were firmer, with the yield on the benchmark 2030 government issue down 4 basis points to 9.245%.
(Reporting by Mfuneko Toyana; Editing by Rashmi Aich)
