Cape Town – Finance Minister Enoch Godongwana’s forthcoming budget speech, rescheduled for today, March 12, 2025, comes after an unprecedented delay that has spotlighted the complexities of South Africa’s coalition government.
The initial postponement was primarily due to disagreements over a proposed 2% increase in value-added tax (VAT), a measure fiercely contested by the Democratic Alliance (DA) and even some African National Congress (ANC) members.
This internal discord not only delayed the budget but also led to a temporary depreciation of the rand and a decline in the Johannesburg Stock Exchange’s Top-40 index, according to to Financial Times.
The proposed VAT hike was intended to address a significant fiscal deficit, exacerbated by the cessation of US funding for HIV/Aids programs under President Donald Trump.
However, the DA argued that such an increase would burden an already struggling economy, suggesting alternative measures like selling port concessions and implementing cost-cutting strategies.
Godongwana acknowledged these concerns but emphasised the necessity of balancing public interests, economic growth, and fiscal sustainability, The Citizen reported.
“Cabinet is united in the view that the budget must strike a balance between the interests of the public, economic growth and fiscal sustainability,” he said.
As reported by Reuters, the budget’s delay has raised concerns about investor confidence and the government’s ability to manage public finances effectively.
The rand’s slight weakening as investors await the rescheduled budget underscores this unease.
However, there is cautious optimism that a prudent and consensus-driven budget could stabilise the currency and restore market confidence.
As Godongwana prepares to deliver the budget today, the nation watches closely.
The government’s ability to navigate internal disagreements and present a unified fiscal plan will be crucial not only for economic stability but also for reinforcing public trust in the coalition’s governance.
The outcomes of this budget will likely have lasting implications for South Africa’s fiscal health and its standing in the international financial community.
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