Minister in the Presidency Khumbudzo Ntshavhenini. (GCIS)
Cabinet has defended its decision to delay the tabling of the 2025 national budget, citing the need to address the country’s pressing funding challenges in an increasingly constrained fiscal environment.
Finance Minister Enoch Godongwana’s presentation of the budget to parliament was called off on 19 February and postponed to 12 March following disagreements among parties in the government of national unity over the treasury’s proposal to raise VAT from 15% to 17% to fund increased spending on front-line services.
This was the first deferment of the budget in the country’s democratic history and the government has stressed that it is provided for in the Public Finance Management Act.
In a media briefing on the previous day’s cabinet meeting, Minister in the Presidency Khumbudzo Ntshavheni said the postponement was because of a collective effort in the coalition government to find solutions to the country’s financial problems.
“The postponement, while it is the first in the history of South Africa, but not out of the norm in other jurisdictions, is still within the provisions of the Public Finance Management Act.
“Cabinet wishes to reiterate that the postponement is a result of efforts to collectively address our nation’s funding challenges within a constrained fiscal environment,” she said, adding that deliberations in “cabinet are ongoing to determine the best ways to fund national priorities and ensure the budget reflects the aspirations of all South Africans”.
According to section 27 of the Act, the annual budget should be presented before the start of the financial year which runs from 1 April to 31 March.
In exceptional circumstances, the Act permits the budget to be tabled as soon as possible after the new financial year has commenced. This provision ensures that government operations can continue without interruption, even if the budget is delayed.
During such delays, departments would be authorised to use funds based on the previous year’s budget allocations until the new budget is approved.
The budget delay sparked criticism from some opposition parties and economic analysts, with the Economic Freedom Fighters, for example, calling it a sign of financial mismanagement and lack of preparedness by the government.
The South African Communist Party, however, defended the move, saying it reflected the government’s struggle to fund essential services without resorting to austerity measures.
The party has called for increased public spending to stimulate economic growth and job creation.
Meanwhile, business groups have urged the government to use the additional time to ensure that the budget effectively addresses South Africa’s economic challenges.
The South African Chamber of Commerce and Industry stressed the need for clarity on taxation, investment incentives and infrastructure spending.
“We are concerned that the apparent lack of agreement by the government of national unity partners, and other political parties with sufficient votes to pass the budget, will lead to uncertainty and an inherent perception of political instability in the ruling coalition government of SA,” it said in a statement.
The chamber urged decision-makers to cut non-essential government spending instead of raising taxes, warning that higher levies could hurt business confidence, slow economic growth and increase unemployment. It said there was no clear evidence that sufficient efforts had been made to find savings without affecting critical social services and infrastructure.
Using the example of budget disputes in established democracies, including Germany’s coalition collapse in 2024, then UK prime minister Liz Truss’s failed tax cuts in 2022 and the US congress’s recurring budget delays, the chamber acknowledged that the South African impasse was a serious matter, but added that such disputes reflected a dynamic political system.
Last week, President Cyril Ramaphosa told reporters that the delay in presenting the budget was not a crisis and would not derail the coalition government. Being in such an arrangement meant that “you have got to work with others, you have to take others along, you have to build consensus”.
“It is in many ways the maturation of our own democracy. This is not one of those crises that will threaten the [government of national unity]. It is a hiccup that we will get over. In other countries, differences over the budget result in the collapse of government,” he said.