South Africa coalition government over Budget 2025

South Africa has plunged into uncharted political turmoil as rifts within the governing coalition intensify over the long-delayed national budget.

A month-long postponement of the budget announcement has exacerbated existing divisions, leaving the country in a precarious position.

This crisis unfolded after Finance Minister Enoch Godongwana’s fiscal plan encountered vehement opposition from key coalition allies, leading to a second rejection of his proposals.

The ruling African National Congress (ANC), which forged a government of national unity (GNU) with nine other political entities following its electoral decline last year, now faces an uphill battle in securing the necessary votes to pass the budget.

Without the backing of its principal coalition partner, the Democratic Alliance (DA), the ANC’s financial blueprint is destined to falter—unless it revises its contentious policies or garners support from opposition factions.

Godongwana was previously compelled to delay his budget statement due to widespread condemnation of his proposal to increase value-added tax (VAT).

This measure, which would have heightened the cost of living at a time when South Africans were grappling with severe economic hardship, ignited a political firestorm.

The postponement sent shockwaves through the nation, marking an unprecedented development since the fall of apartheid in 1994.

A Revised Budget Amidst Unyielding Resistance

Following extensive negotiations within the governing coalition, Godongwana returned with a recalibrated fiscal plan that he lauded as “bold and pragmatic.”

” In an attempt to mollify his coalition partners, he introduced a staggered VAT hike instead of the abrupt two-percentage-point increase initially proposed.

His revised approach suggests a phased increase from 15% to 16% over two years, a compromise designed to reduce immediate financial strain.

The minister justified the necessity of tax augmentation by citing persistent fiscal burdens in critical sectors such as healthcare, education, infrastructure, and national security. “Choices must be made—should we shutter schools, hospitals, or clinics?

Should we dismiss workers? These are the stark decisions before us,” Godongwana asserted.

He underscored that VAT was the most viable tax avenue, as raising personal or corporate levies would deter investment, stifle job creation, and hinder economic expansion.

Despite the adjustments, the revised budget has failed to placate the DA, which remains steadfast in its refusal to endorse any tax hike unless the ANC implements sweeping economic reforms.

The DA has demanded assurances that increased revenue will not be squandered but rather utilised to drive growth, curb governmental inefficiency, and stimulate employment within a three-year timeframe.

The Cracks in the Coalition Deepen

This impasse has damaged President Cyril Ramaphosa’s reputation as a skilled negotiator. Of all the ANC’s coalition allies, only the minor Patriotic Alliance (PA) has expressed support for the budget.

The ongoing discord underscores the growing instability within the fragile coalition, as the two largest parties remain at loggerheads over fundamental policy matters.

Among the most contentious issues is a controversial land reform law that permits the government to expropriate private property without compensation under specific circumstances.

The DA has challenged this legislation in court, arguing that it contravenes constitutional principles and endangers property rights.

Further complicating matters, the ANC’s budget proposal has also been rebuffed by the two largest opposition parties—former President Jacob Zuma’s Umkhonto weSizwe (MK) and Julius Malema’s Economic Freedom Fighters (EFF).

Both parties contend that the VAT increase disproportionately burdens the nation’s most vulnerable citizens, exacerbating poverty rather than alleviating it.

This deadlock places the ANC in a precarious position, as it must secure the endorsement of at least one of the three major opposition parties to ensure the budget’s passage.

The Uncertain Road Ahead

Political analyst Thokozile Madonko, from Wits University, characterises the current standoff as a foray into “uncharted territory.” She emphasises that parliament’s role will be pivotal in determining whether the budget is accepted, revised, or ultimately rejected.

The ANC’s days of unilateral policy enforcement are over, and the party now finds itself compelled to engage in intricate negotiations to avoid a parliamentary defeat—a scenario that could precipitate the collapse of the coalition government.

Madonko criticised Godongwana’s reliance on a VAT hike, branding it the “path of least resistance.” She argued that a wealth tax targeting the nation’s economic elite would have been a fairer alternative, sparing the broader population from additional financial strain.

Another economic expert, Adrian Saville, lambasted the budget as a “recycled litany of empty promises,” noting that similar pledges to spur economic growth and job creation had been made in previous years with little to show for them. “Words alone are meaningless.

We need precise figures and actionable plans so that we can measure success—or failure—in a year,” Saville remarked.

Once regarded as a stabilising force within the government, Godongwana’s credibility has suffered a significant blow amid the ongoing budgetary crisis.

His immediate challenge lies in navigating the budget through an increasingly adversarial parliament. Failure to do so could further erode public confidence in his leadership and ignite deeper scepticism about his suitability for the role.

Frequently Asked Questions (FAQ)

What is the current situation regarding South Africa’s national budget?

The national budget has faced significant delays due to internal disagreements within the coalition government. Finance Minister Enoch Godongwana’s initial proposal was met with resistance, leading to a month-long postponement before the revised budget was finally presented.

Why was the budget initially delayed?

The delay was caused by strong opposition to a proposed increase in value-added tax (VAT), which would have raised the cost of goods at a time when many South Africans were already struggling with high living expenses. This was the first such delay since the end of apartheid in 1994.

What changes were made in the revised budget?

Instead of the initially proposed VAT increase from 15% to 17%, the revised budget suggests a gradual increase to 16% over two years. The adjustments were made to address concerns from coalition partners and minimise immediate financial strain on the population.

Why is VAT being increased?

The government argues that additional revenue is needed to address financial pressures in key sectors such as healthcare, education, transportation, and security.

Godongwana stated that other tax increases, such as on personal income or corporate earnings, could negatively impact investment, job creation, and economic growth.

How has the opposition responded to the revised budget?

The Democratic Alliance (DA), the ANC’s primary coalition partner, remains opposed to any tax increase unless accompanied by significant economic reforms.

Additionally, major opposition parties, including the Economic Freedom Fighters (EFF) and Umkhonto weSizwe (MK), have rejected the budget, citing concerns that the tax hikes disproportionately affect the poor.

What are the consequences of the budget deadlock?

Without sufficient support, the ANC faces difficulty passing the budget, which could lead to further instability in the coalition government. If the budget is rejected by parliament, it may trigger a governmental crisis, potentially resulting in the coalition’s collapse.

What are the concerns regarding property expropriation?

A controversial land law that allows for the expropriation of private property without compensation has added to tensions within the coalition. The DA is challenging the law in court, arguing that it violates property rights and is unconstitutional.

What criticisms have been made about the budget?

Some analysts believe that increasing VAT was the “easiest” option, arguing instead for a wealth tax that would target the wealthiest individuals rather than the general population. Others have criticised the budget for repeating old promises without clear execution strategies.

How does this affect President Cyril Ramaphosa’s leadership?

The budget controversy has weakened President Ramaphosa’s image as a skilled negotiator. His inability to unify the coalition and secure widespread support for the budget has raised doubts about his government’s long-term stability.

What are the next steps for the budget?

Parliament will now play a crucial role in deciding the budget’s fate. The ANC must either negotiate with opposition parties to secure approval or risk having the budget voted down, which could lead to significant political and economic consequences.

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