Budget speech postponed amid GNU disagreements over VAT hike

Finance minister Enoch Godongwana

South Africa’s national budget was postponed at the last minute on Wednesday because of a disagreement between the political parties in the ruling coalition government.

The speaker of the national assembly, Thoko Didiza, told MPs that the budget had never been postponed like this in the three decades since the end of apartheid.

Finance minister Enoch Godongwana had been scheduled to deliver the budget speech at 2pm. The budget is now expected to be tabled on 12 March.

The rand extended losses after the budget was delayed, at one point trading down 1% against the US dollar

For the first time in the democratic era, the ANC will need the support of other parties to pass the budget this year, since it lost its parliamentary majority in an election last year.

Its main partner in the coalition, the Democratic Alliance, said the budget had been postponed because of its opposition to the ANC’s proposal to increase VAT by two percentage points.

The rand extended losses after the budget was delayed, at one point trading down 1% against the US dollar.

Business Day reported on Wednesday that the proposal to increase VAT was intended to plug holes in the education budget and support social spending. The last time VAT was raised was in 2018, and opposition parties and labour unions have in recent weeks voiced strong opposition to rumours of a further increase.

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Since the aftermath of the 2008/2009 global financial crisis, the government has struggled to deliver economic growth rates high enough to make a dent in inequality and unemployment. Public debt has climbed steeply because of revenue shortfalls and runaway spending.

In a statement about the delay in tabling the budget, Business Leadership South Africa CEO Busi Mavuso said the development is “negative for business sentiment”. It also, however, shows that the political parties of the GNU are “able to stand their ground, showing that the GNU is not going to rubberstamp business as usual”.

Business Leadership South Africa CEO Busi Mavuso

“It is now critical that the GNU demonstrate that doing so leads to an improved outcome, a budget that they are united behind that delivers for economic growth,” said Mavuso. “The delay is a shock to the public as well as investors here and abroad. Restoring confidence is the first priority.”

She said members of the GNU must ensure government’s books are balanced. “While the delays reflect a standoff over increasing VAT, the reality is that government must find the revenue required to cover its costs. It cannot damage the progress government has made in regaining investor faith, seen in several ratings agency’s outlook upgrades.” — Kopano Gumbi, Wendell Roelf, Tannur Anders, Sfundo Parakozov and Olivia Kumwenda-Mtambo, (c) 2025 Reuters, with additional reporting (c) 2025 NewsCentral Media

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