South Africa's Finance Minister Delays Budget Amid Coalition Disputes

Finance Minister Enoch Godongwana's planned presentation of the national budget has faced significant delays due to intense disagreements among coalition partners, leading to economic uncertainty and market instability.

South Africa's Finance Minister Enoch Godongwana has postponed the announcement of the national budget amid a significant conflict within the coalition government. The unveiling of the budget was hindered after coalition members opposed Godongwana’s proposal to increase the value-added tax (VAT) from 15% to 17%. This proposal would have exacerbated the existing cost-of-living crisis faced by many South Africans by raising the price of essential goods.

Godongwana, a member of the African National Congress (ANC), encountered backlash from coalition partners after initially indicating the tax changes during last week's cabinet meeting. The Democratic Alliance (DA), the coalition's second-largest party, voiced strong opposition, claiming that the VAT hike would "break the back of our economy," and arguing that it would unduly burden South African citizens.

The proposed tax increase was the first significant proposal by the ANC since it lost its parliamentary majority in last year’s elections, necessitating the formation of a coalition government. Following the announcement of the postponement, South Africa's currency sharply declined against the US dollar, prompting concerns in financial markets. The budget will now be presented on 12 March, allowing time for further negotiations among the coalition members to address these differences.

The Economic Freedom Fighters (EFF) criticized the postponement, calling it a "symptom of weak, indecisive, and opportunistic governance." Conversely, the DA heralded the decision as a triumph, pledging to support a budget that prioritizes economic growth and job creation. This situation underscores the growing tensions within South Africa's political landscape as the government navigates the challenges of coalition governance in a time of economic distress.