South Africa’s cabinet continues budget discussions right before the finance minister’s presentation, after prior delays due to disagreements over a VAT increase. The Democratic Alliance opposes the proposed hike, contributing to a budgetary impasse. While the President’s spokesperson is optimistic, the DA has not yet agreed to the revised budget.
South Africa’s cabinet faced considerable pressure as it continued discussions regarding the 2025 budget just under an hour before its scheduled presentation by the finance minister. A source from the Democratic Alliance highlighted that this deliberation followed a prior postponement triggered by a lack of consensus within the coalition government.
Originally set to be unveiled three weeks earlier, the budget announcement was delayed due to disputes over a proposed increase in value-added tax (VAT) by 2 percentage points to a total of 17%. The Democratic Alliance, the second-largest party in the coalition led by the African National Congress, opposed the VAT hike, which created a significant impasse unprecedented since the end of apartheid.
Vincent Magwenya, spokesperson for President Cyril Ramaphosa, expressed optimism, stating he was “reasonably comfortable” that the remaining obstacles could be addressed for the budget to pass. He noted, “A careful balance has been struck and all the necessary compromises have been made on issues related to the budget. The DA must support the revised version of the budget as it aligns to some of their proposals.”
Despite the efforts for compromise, reports indicated that less than an hour before the budget speech, the Democratic Alliance had yet to agree on supporting the revised budget, which adds further uncertainty to the proceedings.
In summary, the South African cabinet is grappling with budgetary deliberations close to the scheduled presentation date, resulting in tensions within the coalition government. The proposed VAT increase created significant disagreement, primarily with the Democratic Alliance opposing it. While there is some optimism about reaching an agreement, the lack of definitive support from the DA raises concerns about the potential passage of the budget.
Original Source: www.marketscreener.com
