Minister of Finance Enoch Godongwana, far right, and the deputy ministers of Finance, Dr David Masondo and Ashor Sarupen, attend a media briefing on Wednesday. Picture: Kopano Tlape GCIS
Cape Town - In an unprecedented move, the tabling of the 2025 Budget by Finance Minister Enoch Godongwana set for Wednesday was postponed until next month.
The postponement was preceded by a last-minute meeting of the Cabinet to receive a briefing from Godongwana amid a reported VAT increase of 2% that would have pushed it to 17%. Minister in the Presidency Khumbudzo Ntshavheni later emphasised that the postponement was not about parties disagreeing on the Budget.
Addressing Speaker of Parliament Thoko Didiza, EFF leader Julius Malema demanded that Godongwana present the Budget and Parliament could decide whether to adopt it.
“There is no government. It has collapsed. It has no capacity to present the Budget,” Malema said.
MK Party chief whip Mzwanele Manyi said the postponement was an indication of the crisis the country is facing.
“We don’t want to hear rumours. We heard VAT would have been increased by 2%. We heard rumours that the ANC government wanted to impoverish our people. The minister must come here and say what he wanted to say,” he said.
UDM parliamentary leader Nqabayomzi Kwankwa said a proposal from the executive should not be final.
Freedom Front Plus parliamentary leader Corne Mulder said, however, that the Government of National Unity (GNU) was serious about South Africans and the future.
“We must understand (that) things could happen in terms of when the time is needed for the ministers to have discussions and for the executive to discuss these things,” Mulder said.
BOSA leader Mmusi Maimane raised concerns about the time taken for processing the Budget. “Any time there is a delay, it means that Parliament is placed under pressure in not being able to consult with the people, for this is where the people are represented,” he said.
IFP chief whip Nhlanhla Hadebe said: “We view this as a sign of leadership when you need more time for fine-tuning some aspects and in requesting Parliament for a postponement.”
DA chief whip George Michalakis said the postponement demonstrated that Parliament could no longer be rubber stamping policies that could cripple the economy.
“The GNU does not consist of one political party. The DA supports this postponement and hopes the executive will use the opportunity to consider all proposals,” Michalakis said.
ANC deputy chief whip Doris Dlakude said: “We agree with the postponement to allow the executive to finalise those contentious issues they are dealing with in the interest of all South Africans.”
Briefing the media afterwards, Godongwana said the Budget will now be tabled on March 12.
He said the postponement would allow for deliberations to take place and that the 2% VAT increase could not be the only issue. “You can’t have 2% alone without talking about what is going to replace it.”
Godongwana said that given the country’s challenges and priorities, the issue was funding and whether there should be continuation of borrowing and raising taxes.
“There is general agreement in the current environment that we need to find a way to fund our priorities. The debate is the best way of doing it.”
Godongwana said the postponement would force a discussion on the trade-offs so the Budget could be delivered.
He also said that the Treasury made a presentation on the Budget to the Cabinet two weeks ago and indicated there would be tax increases, without disclosing the amount.
The DA has previously threatened not to vote for the Budget if its proposals were not accommodated.
Annabel Bishop, the chief economist at Investec, said: “Markets are still weighing up the implications of the delay in the Budget, with the reported issue revolving around a proposed 2% VAT increase, which some parties were not in agreement with, risking today’s Budget not being passed by Parliament.”
Lead economist at KPMG, Frank Blackmore, said: “Most of the market commentators did not foresee a VAT increase as part of this year’s Budget. From around Wednesday (yesterday) morning, the figure of 2% was being discussed, to most peoples’ disbelief.”
The disbelief was mostly due to the effects the VAT increase would have on the nation’s poor.
Blackmore said not only would it be highly inflationary, but it would decrease the disposable incomes of individuals and be regressive, meaning the bulk of the cost burden would be carried by the poorer individuals in the country.
“The most alarming aspect of the whole issue was the uncertainty that this has provided into financial markets. We saw a reaction on the rand as well as the bond and equity markets that was negative at the time. One would have thought that even the GNU, with its constituent parties, would have had a strategic plan for the economy over the next three years that would have been debated and finalised before this Budget event took place, which was obviously not the case,” Blackmore added.
Khulekani Mathe, CEO of Business Unity South Africa (BUSA) said the postponement of the Budget speech was a significant concern for South Africans, the business community, and the markets.
“It should have been apparent much earlier that the parties in the GNU were struggling to reach an agreement on the Budget, and the postponement should have been announced sooner to avoid compromising the credibility of the National Treasury.
We urge all parties to prioritise the country’s needs over political interests and to use the additional time now available to Cabinet to develop a Budget that focuses spending on programmes that promote economic growth.”