The Democratic Alliance (DA), which is the second-largest party in South Africa’s ruling coalition, has declared its intention to support the national budget only under certain conditions, with a particular emphasis on boosting economic growth.
A previous draft, scheduled for presentation by Finance Minister Enoch Godongwana on February 19, experienced an unprecedented postponement after the DA and other coalition members objected to a proposed two-percentage-point increase in the value-added tax (VAT) to 17%. This adjustment was expected to raise R191 billion over the next three fiscal years.
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The DA will support the new budget set for Wednesday only if it focuses on revitalizing the economy, as the previous proposal had “clearly given up on growth,” remarked party leader John Steenhuisen in a recent interview with Bloomberg.
The coalition government, led by the African National Congress after it lost its outright majority in last year’s elections, has sought to stimulate economic growth, which has been stagnant at below 1% on average for more than a decade.
Additionally, the DA is urging the Treasury to commit to privatizing the Cape Town port, set deadlines for ongoing structural reforms, conduct a spending review, and audit “ghost employees” in the public sector, per Steenhuisen. The party believes these initiatives could potentially yield R60 billion within the current budget cycle.
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Steenhuisen noted that a “political meeting,” which was arranged earlier this week following cabinet discussions with Treasury, is crucial for achieving a “solid deal” before the budget presentation.
This agreement could entail the Treasury raising the VAT rate by a smaller increment of 0.5 percentage points in return for a review of expenditures and a ramp-up in economic growth, according to sources familiar with the talks, as reported by Bloomberg.
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A political consensus before Wednesday would ensure that the coalition government remains cohesive when Godongwana delivers his budget address.
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Steenhuisen expressed doubts about the possibility of another postponement of the speech; however, he warned that if the DA’s conditions are unmet, the party would abstain from supporting the budget, resulting in a “scramble” in Parliament where the coalition would have to acquire backing from external entities.
“Government decisions must not be a matter of my way or the highway,” he emphasized.
© 2025 Bloomberg L.P.
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