Finance Minister Enoch Godongwana is under mounting pressure to secure backing from Government of National Unity (GNU) partners for his upcoming 2025 budget, as concerns grow over the potential rejection of a third fiscal proposal. The minister is scheduled to deliver his budget speech on Wednesday.
This follows the rejection of two earlier budget proposals and the recent cancellation of a proposed Value-Added Tax (VAT) increase. The withdrawal of the VAT hike has further constrained the National Treasury’s ability to address the country’s deepening fiscal crisis.
Professor Jannie Rossouw of the Wits Business School has warned that failure to pass the new budget would significantly undermine the government’s economic credibility.
He stressed the importance of ensuring political alignment before the budget is presented to Parliament, urging that the document should have already received support from key GNU stakeholders.
The initial 2025 budget, expected in February, was delayed due to disagreements within the GNU regarding the proposed VAT increase. A revised version tabled in March included staggered increases of 0.5 percentage points but was met with firm opposition, particularly from the Democratic Alliance and other parties both within and outside the GNU.
The Western Cape High Court later halted the proposal, and the Economic Freedom Fighters also challenged it through legal channels.
With limited revenue-raising options available, Godongwana now faces the difficult task of balancing fiscal demands while maintaining political unity. According to Rossouw, the budget will likely rely on significant expenditure cuts rather than new taxes, noting that current economic conditions do not allow for additional tax burdens on citizens.
Rossouw suggested that there are several areas where spending could be reduced without negatively affecting essential services. He proposed eliminating the positions of all 43 deputy ministers, a move supported by several political parties who have criticised the size of the GNU.
He also recommended shutting down departments considered ineffective, such as the Department of Small Business Development, which he claimed has made no measurable impact in certain regions.
In addition, Rossouw pointed to what he described as wasteful spending, including the excessive scale of the presidential motorcade and ongoing financial support for struggling state-owned enterprises such as South African Airways.
He reiterated long-standing calls for the government to divest from these entities, arguing that ideological commitments should not come at the expense of the country’s fiscal health.
Despite these challenges, Rossouw remains hopeful that the budget can be passed, provided it receives adequate political support.
He emphasised the need for a clear and actionable plan to stimulate economic growth, arguing that such a strategy is essential for addressing South Africa’s high unemployment rate and revitalising the economy.
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