South Africa’s 2025 Budget: A Coalition Government in Crisis

South Africa’s coalition government is in turmoil over the national budget tabled by Finance Minister Enoch Godongwana, following significant backlash primarily from the Democratic Alliance (DA). The budget features a revised VAT increase and emphasizes the need for taxation amidst a cost-of-living crisis. With divergent views among coalition partners and opposition, the ability to pass the budget is uncertain, posing risks to the current governmental structure.

South Africa currently navigates a challenging political landscape as divisions within the coalition government have intensified over the recently tabled national budget. After a month-long delay, Finance Minister Enoch Godongwana introduced a budget met with significant backlash, particularly from the Democratic Alliance (DA), the ANC’s largest coalition partner. The DA’s disapproval poses a substantial hurdle for passing the budget unless the ANC reconsiders its contentious policies or garners support from other opposition parties.

Last month, Minister Godongwana delayed his budget presentation in response to strong objections regarding a proposed increase in value-added tax (VAT), which would exacerbate the existing cost-of-living crisis for South Africans. This unprecedented postponement marked a significant political moment, as it was the first such delay since the end of apartheid in 1994. Upon presenting the revised budget, Godongwana described it as “bold and pragmatic.”

In an effort to address coalition concerns, the Minister proposed a moderated VAT increase: raising it from 15% to 16% in two stages over two years, instead of an immediate increase to 17%. He emphasized that this tax adjustment is essential to manage persistent financial pressures in crucial sectors such as health, education, and security. Godongwana posed a stark dilemma to coalition partners: whether to accept increased taxes or face cuts to vital services.

The ANC supports the revised budget, but the DA remains steadfast, refusing to back any tax increases without guaranteed reforms to stimulate economic growth and job creation. This stalemate has diminished President Cyril Ramaphosa’s standing as a consensus builder within the coalition, with only smaller coalition partner, the Patriotic Alliance, expressing support for the budget.

Ongoing disputes reflect broader tensions within the coalition government, particularly regarding controversial land reform laws, which have prompted legal challenges from the DA. Additionally, two major opposition parties have voiced their rejection of the budget, arguing that the proposed tax hikes disproportionately affect the impoverished population. Consequently, the ANC finds itself in a precarious position, requiring outside support to pass the budget, raising concerns over the stability of the coalition.

Analyst Thokozile Madonko from Wits University noted that this deadlock places South Africa in “unchartered waters,” stressing the critical role of parliament in determining the budget’s fate. Historically, the ANC could assert its agenda with fewer obstacles; however, the current scenario necessitates compromise to avoid the risk of a budget vote failure, which might destabilize the coalition government.

Criticism aimed at Godongwana’s VAT increase suggests it lacks ambition, with some experts advocating for a wealth tax targeting the country’s affluent citizens instead. Adrian Saville characterized the budget as lacking vision, highlighting the need for concrete numbers and plans to address the nation’s unemployment crisis, which exceeds 30%. Despite his previous reputation, Godongwana’s credibility now hinges on successfully navigating the budget through parliament, as public confidence in his leadership begins to wane.

The South African government’s budget situation exemplifies the intricate dynamics of coalition politics amid significant economic challenges. With a divided coalition and rising opposition, Finance Minister Enoch Godongwana faces critical decisions in enacting budgetary measures crucial for managing public services and economic stability. The outcome of this budget will undoubtedly impact the credibility of the ANC and its coalition partners, highlighting the necessity for collaboration within a fragile political framework.

Original Source: www.bbc.com