Finance Minister Enoch Godongwana
The decision to postpone Finance Minister Enoch Godongwana’s 2025-26 national budget speech until 12 March was a cabinet decision and not a result of opposition to the proposed 2% VAT hikes solely by the Democratic Alliance (DA).
Parties representatives across the board, including ANC ministers, had, during a pre-budget speech cabinet meeting, disagreed with the proposal to increase VAT, Minister in the Presidency and Cabinet spokesperson Khumbudzo Ntshavheni told journalists at a media briefing in Cape Town on Wednesday.
“The differences were across parties, including ministers who you would call ANC ministers, so it’s not a one party issue, and there is no need for the minister to engage with the self and outside of what the department does. Part of why we requested a delay as cabinet is that we want to meet as cabinet and have a substantive discussion on the budget,” she said.
“It’s the cabinet ministers who did not approve the budget as it was being tabled, and said they needed more time to engage with the issues of what the minister normally calls the trade-offs. As cabinet, we have not finalised the budget, and therefore we could not proceed to the house for the minister of finance to table the budget.”
She said the focus of the cabinet discussion was not about party politics.
“It’s about what is the balance that we need to achieve between managing our fiscal framework, managing our ability to protect the interest of South Africans in general, and the poor and how do we deal with the inequality that confronts all of us. So it is never a DA, ANC issue,” she said.
Godongwana said a decision had been taken to postpone the 2025 budget speech to 12 March.
“The annual budget is tabled by the minister of finance but it requires deliberations of the cabinet before it is tabled during the National Assembly. Cabinet considered that although the tabling of the 2025 budget was scheduled for release at 2pm on 19 February, a postponement is needed to allow for further deliberations on the budget,” he said.
“Cabinet is united in the view that the budget must strike a balance between the interests of the public, economic growth and fiscal sustainability. Furthermore, the budget is produced and presented before the National Assembly according to rules outlined in the Public Finance Management Act.”
He said section 27 of the Act requires that the annual budget be tabled prior to the start of the financial year or “in acceptable circumstances” on a date as soon as possible after the start of the financial year, as the finance minister.
“Therefore further discussion can take place in preparation for a new or amended budget to be tabled on 12 March,” Godongwana said.
He raised concern that a cabinet minister had leaked information about the proposed budget to hike VAT to the Sunday Times, which had published a story ahead of the budget speech. The proposed budget had been presented during a recent cabinet meeting.
“Two weeks ago, we went to cabinet, among other things [presented] this tax proposal indicating our direction towards a specific tax. Everybody was at that meeting. That’s why one of them leaked it to the Sunday Times. [It was] a cabinet minister. He was not sure about the percent; that is why he used 1% … he knew [the] direction we [were] taking,” Godongwana said.
He said it was the treasury’s usual practice to present the budget to the cabinet ahead of his speech. But the specific details had not been shared at earlier meetings before Wednesday because of market sensitivity.
He said the budget is “a statement of cabinet and so what is happening, in my view, when cabinet becomes involved in the detailed discussions, it’s useful for us”.
DA leader John Steenhuisen had earlier claimed in a statement that the postponement of the budget speech was a result of the party’s opposition to the proposed 2% VAT hike.
“Today is a victory for the people of South Africa as it prevents the implementation of a 2% VAT increase that would have broken the back of our economy.
“The postponement resulted from the DA’s resolute opposition to the ANC’s plan to hike VAT at a time when millions of South Africans are already suffering under a cost of living crisis,” he said.
“The last minute postponement came about because of the failure by the ANC, and specifically Finance Minister Enoch Godongwana’s failure to engage meaningfully with the alternative proposals tabled by the DA.”
Steenhuisen said the DA would “now fight with the same vigour to introduce a new budget that is anchored in growing the economy, rather than increasing taxes or debt”.
“This historic victory demonstrates the DA’s muscle within the government of national unity. For the first time ever, the ANC was prevented from tabling an anti-growth budget. Now is the time to replace a failed ANC VAT budget, with a brand new GNU growth budget,” he said.
Treasury director general Duncan Pieterse said the treasury was concerned about the sustained weaknesses in the rand, which had depreciated after the postponement of the budget speech. He said communications about the incident had already been sent to the country’s key bond holders.
“What we are concerned about are sustained weaknesses in the currency because of what that means for the economic indicators that are important to us from a fiscal framework perspective,” he said.
“For example, a sustained weakness in the currency means that our dollar denominator becomes more expensive, and that shows up in our gross borrowing requirement. A sustained depreciation in the currency means that inflation is likely to be higher because of import inflation, and that has implications for a part of our budget that is indexed to inflation.
“We will be watching the implications of today’s postponement on both the currency and the bond markets, and to the extent that there are changes that we need to factor into the next budget.”