Finance Minister Enoch Godongwana announced during a media briefing in Pretoria on Wednesday that South Africa’s revised national budget will be presented on 21 May. This marks the third budget proposal in four months, following the withdrawal of two previous versions.
The minister acknowledged the chaotic budget process, calling it “messy” and admitting that lessons must be learned by Cabinet, Parliament, and National Treasury. He attributed the instability to the challenges of coalition governance under the Government of National Unity (GNU), which requires multi-party support to pass key legislation.
Once the new budget is approved, National Treasury will develop a revised budget process, with consultations starting as early as September ahead of the Medium-Term Budget Policy Statement (MTBPS) in October.
Commitment to Fiscal Discipline
Godongwana reiterated the government’s commitment to fiscal consolidation, stressing that investors and credit rating agencies assess Treasury’s credibility based on its ability to manage finances responsibly. “We must manage costs better,” he said, ruling out further tax hikes or additional borrowing. Instead, he emphasized the need to “do more with less.”
To boost revenue, the government will crack down on illicit trade, with the South African Revenue Service (SARS) receiving increased funding. In his March budget speech, Godongwana allocated R7.5 billion to SARS over three years—though it remains unclear whether this will be adjusted in the new budget.
No Resignation Despite Budget Turmoil
Despite the unprecedented budget setbacks, Godongwana stated he has no intention of resigning. He argued that he acted within his constitutional mandate and should not be held responsible for the lack of consensus among GNU parties. He added that President Cyril Ramaphosa understands the complexities of the situation.
Addressing the R75 Billion Shortfall
The decision to scrap the proposed VAT increase—which would have raised an estimated R75 billion over three years—has forced the government to reconsider spending cuts. Godongwana confirmed that measures introduced in the March budget to offset the VAT hike’s impact on low-income households will now be withdrawn.
National Treasury Director-General Duncan Pieterse noted that existing laws allow government spending to continue under the previous year’s budget until a new one is approved. However, Godongwana warned that the revenue shortfall will require expenditure reductions, likely affecting service delivery.
Where Will Cuts Be Made?
While calls to reduce the size of the Cabinet and streamline government departments have grown louder, such cuts appear unlikely given the GNU’s need to accommodate coalition partners. Similarly, the public wage bill is expected to remain untouched.
Instead, National Treasury will revise the Appropriation Bill and Division of Revenue Bill to adjust spending in a way that maintains fiscal sustainability. The minister indicated that any additional revenue collected by SARS could help mitigate the shortfall.
What’s Next?
With the new budget due in weeks, negotiations between GNU parties will continue to shape the final proposal. Meanwhile, speculation persists over which areas of government expenditure will face cuts as South Africa navigates its most turbulent budget process in decades.
