South Africa’s coalition government reached a breaking point this week as escalating disputes forced the abrupt cancellation of the annual budget speech—a first in the nation’s three-decade democratic history. Parliament Speaker Thoko Didiza announced the postponement to March, citing unresolved disagreements over a contentious 2% value-added tax (VAT) increase proposed by the African National Congress (ANC).
The ANC, which lost its parliamentary majority in 2024 elections, now relies on a fragile 10-party alliance to pass legislation. Without consensus, South Africa risks fiscal paralysis, warned Finance Minister Enoch Godongwana, highlighting debates over borrowing limits and expenditure cuts. The Democratic Alliance (DA), the coalition’s second-largest party, denounced the VAT plan with a
This tax hike would fracture our already strained economy.
Global pressures compound domestic challenges. President Trump’s suspension of U.S. aid—partly tied to disputes over land reform laws—has strained public health funding. South Africa’s economy, once Africa’s powerhouse, now grapples with:
- A 2% VAT debate threatening consumer spending
- Unresolved U.S. aid cuts worth millions
- Clashes over land expropriation policies
- Education reform disagreements with minority groups
Opposition leaders and analysts warn of dire consequences. The Umkhonto we Sizwe Party condemned the impasse as proof of leadership failure, while Black Business Council CEO Kganki Matabane cautioned investors:
Delaying controllable decisions erodes trust in our institutions.
With GDP growth below 1% since 2022, economists urge swift resolution. As coalition partners resume negotiations, all eyes await March's rescheduled budget—a test of South Africa’s ability to balance competing priorities in its post-apartheid democracy.
