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South Africa must not underestimate the damage the postponement of Budget 2025 has done to the country.
How do we know the minister of finance will actually have a budget to deliver on 12 March when he is supposed to give it another try?
Justice Malala, political journalist and commentator, says it was humiliating for the government of national unity (GNU) that Budget 2025 was delayed. However, he does not think that it means the end of the coalition.
He was unpacking concerns about the postponement of Budget 2025 in the latest PSG Think Big webinar.
One of the important questions he had was whether the DA’s deputy minister of finance, Ashor Sarupen, knew about the proposed 2% increase in VAT to fund the budget shortfall that included an increase in public servant salaries.
“It is a humiliation, a spectacular failure in political management. The budget was supposed to determine the shape and future of this administration. The country’s gross domestic product (GDP) to debt ratio is at 75%.
“What are we going to do about this massive, unsustainable thing right now? We do not know. Everyone in the cabinet knew that Budget 2025 was coming. They could have discussed this among themselves.
“This postponement of Budget 2025 did not need to happen and we will have to do a lot of repair work because many people are looking at us across the globe, asking if Budget 2025 will happen on 12 March. If the DA does not support the ANC in passing Budget 2025, what happens then?”
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However, Malala pointed out that it is not a crisis yet. He reminded people of how previous ministers of finance used to walk to parliament with their deputy ministers and the Sars commissioner with an attitude of “we’ve got this.”
“Now we have a minister of finance at a press conference gossiping with another minister on a hot microphone saying that he is angry with the Sars commissioner. This is our A team. And you have a deputy minister from the DA – where was he in this conversation?
“There was a cabinet meeting two hours before the budget speech. What was going to happen with this VAT hike? This is fundamental to know if we are going to get it right on 12 March. Government and our leaders must all say we have to do something about this and we have to play open cards with each other.”
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Turning to the government’s massive debt burden, Malala pointed out that when Trevor Manuel left as finance minister in 2008, South Africa’s debt ratio was 23.9% of GDP. “We are now at 75%. One of the prominent economists who used to work at the National Treasury said recently that it will be 77% by 2027.
“How are we going to plan to get back to the winning ways of the 2000s? This is a massive challenge for this country.
“This budget should have been all hands on deck. All the ministers in our massive cabinet of 75 should have been working towards resolving these problems or giving us a clear picture of our fiscal priorities and what fundamental reforms are going to be undertaken to bring us back to an economy that grows by 3%.”
Malala agreed with Sars commissioner Edward Kieswetter who wanted Treasury to rather put more effort into tax collection.
“Why are we not putting more effort into curbing corruption? Every year the Auditor General shows how many billions we are losing through corruption. These are the conversations we could have had over the budget, but we did not get to it.”
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He also believes that the fact that the GNU has no medium-term plan is part of the problem.
“This budget and this fiasco with the postponement really says to us they have not talked to each other.
“They do not have a plan. They do not know how we get to economic growth of 3% with our massive debt. This should have happened three months ago, six months ago. We still do not have a national dialogue either.”
Malala said we need a government that wants to go powerfully into the future. “We cannot afford these constant bumps. We had the Expropriation Act a few weeks ago. Now we have the budget differences on VAT. We had had the BELA Act and the National Health Insurance Act.
“I would say we need to go beyond our hope and optimism because we had the new dawn of 2018, when President Cyril Ramaphosa first came in. We had 2019, and it was Thuma mina, send me. We had real optimism and hope, with everyone joining and saying, ‘Let’s do it’.
“But we have not seen the fruit of that. We have been playing below 2% of GDP growth. We must make this thing work, but we cannot afford mistakes. We cannot afford fumbles like the budget postponement. It was a step back and it should not happen, particularly with the stakes so high in South Africa.”
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Malala also referred to another central issue: government spending. “We do not necessarily spend too much. We just do not spend effectively. Capital spending is not prioritised and the recent public sector wage bill has created further financial pressure without a clear way out.”
Turning to global trade, Malala raised concerns about South Africa’s strained relationship with the US and the risk of losing benefits under the African Growth and Opportunity Act (AGOA).
“South Africa has been on the backfoot, particularly given that we went a significant period without an ambassador in Washington. When AGOA comes up for review in September 2025, we must be prepared for potential changes.”
However, Malala said it is important to remember we have a coalition government that will have bumps and no smooth sailing. For him, the question is not whether the GNU will collapse, but whether it will learn from these challenges and improve governance.
“The GNU will continue but real work needs to be done if we are to reap the fruit of this relationship,” he concluded.
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