South Africa’s budget presentation delayed amid coalition dispute

South Africa’s national budget presentation, originally scheduled for Wednesday, has been postponed to March 12 due to internal disagreements within the country’s ruling coalition. This marks the first such delay in the post-apartheid era.

 

National Assembly Speaker Thoko Didiza described the situation as “unprecedented in the past 30 years,” highlighting the growing tensions within the coalition government led by the African National Congress (ANC).

 

VAT Hike Sparks Political Deadlock

 

The ANC, which lost its parliamentary majority in last year’s election, has been relying on coalition partners to push through key financial policies. However, its main ally, the Democratic Alliance (DA), has opposed a proposed two-percentage-point increase in value-added tax (VAT), leading to the current deadlock.

 

The ANC argues that the VAT increase is necessary to address funding gaps in education and social programs, but opposition parties and labor unions have strongly resisted the move, citing concerns over the impact on low-income households. The last VAT increase took place in 2018, and another hike is seen as politically sensitive.

 

Financial Markets React

 

The budget delay has already rattled financial markets, with the South African rand dropping by 1% against the US dollar. Investors fear that continued political instability could weaken the country’s ability to implement economic reforms.

 

South Africa, the continent’s most industrialized economy, has been grappling with slow economic growth, rising public debt, and high unemployment in the years following the 2008-09 global financial crisis.

 

As the new budget date approaches, all eyes will be on the coalition government’s ability to reach a consensus and avoid further economic uncertainty.