South Africa’s Finance Minister Enoch Godongwana has been forced to postpone the unveiling of the national budget following sharp disagreements within the coalition government.
Coalition partners derailed his budget after opposing his plan to raise value-added-tax (VAT), which would have seen the prices of goods go up at a time when South Africans are hard-hit by the cost-of-living crisis.
Godongwana is a member of the African National Congress (ANC), which was forced to enter into a coalition after losing its parliamentary majority in elections last year.
His failure to table the budget sent shockwaves in South Africa, as it has never happened since the end of white-minority rule in 1994.
The currency plummeted against the US dollar, as markets reacted negatively to the news.
The Democratic Alliance (DA), which is the second-biggest party in the coalition, was one of the most vocal critics of the proposed budget.
Its leader John Stenhuisen said the party could not in “good conscience” agree to a VAT increase from 15% to 17% as it would have “broken back the back of our economy”.
VAT was last increased in 2018 from 14% to 15%.
The ANC’s other coalition partners, like the Freedom Front Plus, said they were only told of the proposed hike before Godongwana was due to table the budget.
Godongwana told journalists that the planned increase was mentioned in the cabinet last week.
The budget will now be tabled on 12 March, following further discussions to iron out differences, he said.
The opposition Economic Freedom Fighters (EFF) expressed dismay over the postponement, saying it was a “symptom of weak, indecisive, and opportunistic governance”.
But the DA hailed the postponement as a “victory”, and said it would push for a budget that is “better for growth and employment”.
