ANC secretary-general Fikile Mbalula addresses the media on the postponement of the Budget Speech in Cape Town on 19 February 2025. Picture: Gallo Images/Jeffrey Abrahams
ANC secretary-general Fikile Mbalula has underscored the urgent need for South Africa to avoid further borrowing and deepening its debt crisis following the postponement of Wednesday’s budget speech.
Mbalula made the remarks on the sidelines at the Nieuwmeester Dome in Cape Town on Wednesday.
The delay in tabling the 2025/2026 budget came after a Cabinet meeting where political parties within the government of national unity (GNU) raised concerns over a proposed 2% increase in value-added tax (VAT).
Addressing the media, Mbalula highlighted the importance of carefully assessing South Africa’s financial constraints.
“As the ANC, in terms of the proposal to increase VAT, we are not entirely in support of that, but there’s a mechanism to get us out of the challenge we are facing that our borrowing capacity has been exhausted. That is the challenge that we are facing,” he said.
Finance Minister Enoch Godongwana stated during a media briefing on Wednesday that the National Treasury was confronted with difficult decisions — either to borrow more money, implement further spending cuts, or increase taxes.
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Mbalula also reinforced the need for a balanced approach, emphasising that the government has already exhausted its borrowing capacity.
“We are of the view that if you are going to consider VAT as an intervention, it must not affect the zero-rated goods in terms of that. But nonetheless, it is a matter worth considering and engaging going forward.
“Even the decrease to 1%, it is a bigger challenge, and that is why it has been agreed to entirely let this matter be considered and do away with VAT as an option. That is the matter that we’re looking at.”
Mbalula highlighted that had the Treasury proceeded with the budget statement on Wednesday, there would have been a need to reassess and recalculate figures.
“Only between now and March that can actually happen,” he said.
“The minister has done the correct thing of engaging everybody, and this is the consequence of that engagement.”
READ MORE: Budget speech: ANC ministers also opposed VAT hike, Godongwana slams DA’s ‘identity crisis’
When asked whether government discussions included possible retrenchments of public servants, Mbalula acknowledged the broader financial challenges.
“That is why we are saying that the Treasury must take everybody into confidence as to the reasons, and not even the Treasury — government must do so around issues of engagement. There’s a whole lot of challenges that are facing us in relation to this budget cycle.”
Mbalula also commented on the recent executive order by former US President Donald Trump, which froze almost all foreign development assistance for 90 days.
“It has got nothing to do with this. They found us here, and they gave us money, which we appreciated, and then we invested a lot in our own fiscus to address the scourge of HIV/Aids.”
READ MORE: Trump’s order doesn’t halt crucial HIV/AIDS relief
Regarding concerns over South Africa’s inclusion in the African Growth and Opportunity Act (Agoa) being at risk, Mbalula stated that diplomatic channels were being used to resolve the issue.
“Government has been involved in shuttle diplomacy, but over and above that, we are engaged with everybody else, and we have supported government in terms of these engagements.
“The question of USAID will affect our NGOs [non-government Organisations], but our HIV/Aids programmes are not entirely dependent on USAID [United States Agency for International Development] — that we must get very clear.”
Meanwhile, President Cyril Ramaphosa has reassured South Africans that Cabinet deliberations will result in a national budget that protects the most vulnerable.
“We are called upon as the national leadership to pursue all initiatives aimed at growth in order for us to increase employment and alleviate the effects of poverty,” the president said in a brief statement on Wedneday.
“The government of national unity will in the coming days and weeks intensify our efforts to balance the imperatives that drive the fundamental growth objectives of this administration with the realities of a constrained fiscal environment.
“We are working as partners to ensure that the Budget is one that works for individuals and investors alike,” Ramaphosa added.
The Budget Speech is set to be delivered on 12 March.
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