South Africa’s 2025 budget is facing last-minute negotiations, having been postponed due to disagreements over a VAT increase. The Democratic Alliance opposes the increase, creating a political impasse. Although the President’s office is optimistic about resolving issues, the DA had not agreed to support the revised budget shortly before the presentation.
South Africa’s cabinet was in session discussing the 2025 budget mere minutes before the scheduled presentation by the finance minister in parliament. This situation emerged after the annual budget was previously delayed due to disagreements among coalition government members regarding a proposed 2 percentage point increase in value-added tax (VAT) to 17%.
The Democratic Alliance, the second-largest party in the coalition led by the African National Congress, opposed the VAT increase, resulting in a stalemate. This impasse marks a notable episode for South Africa in the post-apartheid era.
A spokesperson for President Cyril Ramaphosa expressed confidence, stating he was “reasonably comfortable” that outstanding issues could be resolved for the budget’s passage. Vincent Magwenya, the spokesperson, emphasized the careful compromises reached related to the budget’s issues, urging the DA to support the revised version in alignment with some of their proposals.
However, as the speech was about to commence, reports indicated that the Democratic Alliance had yet to reach an agreement to support the revised budget. Such developments highlight the challenges within the coalition government in managing fiscal policy effectively.
The ongoing negotiations surrounding South Africa’s 2025 budget illustrate the complexities of coalition governance, particularly regarding tax policy. The Democratic Alliance’s opposition to the proposed VAT increase has created a significant political impasse, reflecting broader tensions within the government. Despite efforts to reach a compromise, including reassurances from President Ramaphosa’s office, uncertainty remained just before the budget presentation, underscoring the precarious nature of political consensus in South Africa.
Original Source: www.marketscreener.com
