South Africa’s much-anticipated national budget presentation was unexpectedly postponed on Wednesday, marking an unprecedented delay in the post-apartheid era. National Assembly Speaker Thoko Didiza confirmed that such a postponement had never happened in the past 30 years, with the budget now set to be tabled on 12 March 2025.
The delay stems from a dispute within the country’s coalition government, with the ruling African National Congress (ANC) unable to garner the necessary support from its coalition partners. The ANC, which lost its parliamentary majority in the 2024 elections, requires the backing of opposition parties to pass critical legislation, including the national budget. A key point of contention was the proposal by the ANC to raise the value-added tax (VAT) by two percentage points, a move vehemently opposed by its main ally, the Democratic Alliance (DA).
The proposed VAT increase is part of the ANC’s plan to address significant funding shortfalls in key sectors, including education and social welfare programs. The last VAT increase occurred in 2018, but the current proposal has been met with strong resistance from opposition parties and labor unions, who argue that the hike would burden the country’s already struggling population.
The delay has rattled financial markets, with the South African rand losing as much as 1% of its value against the US dollar, reflecting growing uncertainty regarding the country’s fiscal stability. Market analysts have warned that the political deadlock could undermine investor confidence in South Africa, already grappling with high public debt, slow economic growth, and persistently high unemployment rates.
South Africa’s economy, the largest and most industrialized on the continent, has been under strain in recent years, with sluggish growth exacerbated by the aftermath of the 2008-09 global financial crisis and ongoing domestic challenges. As the nation struggles to recover and address its fiscal deficits, the delay in the budget presentation has further raised concerns about the government’s ability to implement necessary reforms and ensure economic stability in the face of mounting public pressure.
With the new budget proposal scheduled for presentation in March, the political battle over VAT and other fiscal policies is expected to continue to dominate discussions in South Africa’s Parliament, as the government seeks a way forward to address its financial challenges while managing the complex dynamics of its coalition government.
