South Africa’s Finance Minister, Enoch Godongwana, announced the postponement of the 2025/26 annual budget presentation, originally scheduled for February 19, 2025, to March 12, 2025. This unprecedented delay stems from disagreements within the ruling coalition government, particularly concerning a proposed 2% increase in the value-added tax (VAT) rate.
The proposed VAT hike aimed to address funding gaps in the education budget and support social spending. However, it faced strong opposition from various political parties and labor unions. The Democratic Alliance (DA), a key coalition partner, expressed concerns that the VAT increase would exacerbate economic challenges for citizens.
The postponement has led to immediate economic reactions, including a decline in the rand’s value against the dollar and a downturn in the stock market. Retailers, in particular, have been adversely affected by the uncertainty surrounding the budget.
In response to the delay, the National Treasury has extended the close-out period for budget documents until March 12, 2025, aligning with the new budget presentation date. During this period, senior officials will be unavailable as they prepare for the upcoming budget release.
The postponement underscores the challenges within South Africa’s coalition government in reaching consensus on fiscal policies. As the new budget date approaches, stakeholders will be closely monitoring the government’s ability to navigate these disputes and implement effective economic strategies.
