South African Budget Delayed Amid Coalition Disputes

In an unprecedented move, South Africa's Finance Minister Enoch Godongwana has delayed the national budget presentation, facing a standoff within the coalition government over a proposed VAT increase, raising tensions amid economic struggles.

South Africa's Finance Minister Enoch Godongwana has encountered significant setbacks after he was unable to present the national budget, forcing a postponement due to intense disagreements among coalition partners. This impasse arose from his controversial proposal to increase the value-added tax (VAT) from 15% to 17%, a plan that has faced staunch opposition at a time when many South Africans are grappling with escalating living costs. Godongwana, representing the African National Congress (ANC), which formed a coalition after losing its parliamentary majority in the recent elections, saw this budget controversy send ripples through the country.

The cancellation of the budget unveiling shocked financial markets and citizens alike, as this marks the first time such an event has not occurred since the end of apartheid in 1994. In the wake of the news, the South African rand fell sharply against the US dollar, reflecting the market's disillusionment with the situation. Criticism from coalition member the Democratic Alliance (DA) was particularly vocal, with party leader John Stenhuisen asserting that any VAT hike would severely damage an already fragile economy. They argue that any tax increase would disproportionately affect citizens living under tough economic conditions, especially as the last VAT increase occurred in 2018.

The ANC's coalition partners, including the Freedom Front Plus, expressed concern over the lack of communication regarding the tax increase. They were reportedly informed about the plan just before Godongwana was set to announce the budget. In comments to reporters, Godongwana stated that the proposed VAT rise had been discussed in the Cabinet meeting just a week prior to the budget's scheduled unveiling.

The new date for the budget presentation has now been set for March 12, as discussions continue to resolve the existing conflicts among coalition members. Meanwhile, the opposition party Economic Freedom Fighters (EFF) criticized the delay, branding it as indicative of weak governance, while the DA celebrated the postponement as a win, advocating for a budget that emphasizes growth and job creation.