The final stretch for the national budget seems all uphill for finance minister Enoch Godongwana and his colleagues in the ANC who are now looking to deputy president Paul Mashatile to persuade unwilling opposition parties to vote for it.
Parliament will vote on the budget on April 2.
Business Day reliably understands that the majority of the 10 parties in the government of national unity (GNU) were still standing firm in their opposition to the 0.5 percentage point increase in VAT tabled by Godongwana on March 12.
Mashatile is leading consultations on the matter through the GNU clearing house mechanism which he heads. The clearing house was created by the GNU members as the body of last resort on disagreements between the partners. The deputy president is also the leader of government business in parliament.
Mashatile is said to be working closely with ANC chief whip in parliament Mdumiseni Ntuli who is said to be speaking to all opposition parties.
The ANC’s other option is to win the EFF’s support, but Business Day understands that the party’s condition for supporting the budget is for the ANC to boot the DA out of the GNU.
There are no signs yet of any discussions with the MK party, the official opposition and the third-largest party in parliament after the ANC and DA.
“The deputy president as the leader of government business is working tirelessly to ensure that the fiscal framework is passed as a critical step towards adopting the division of revenue as well as the Appropriation Bill,” Mduduzi Mbada, head of secretariat for the GNU clearing house, told Business Day on Wednesday.
“This includes engaging all parties in parliament by working with the [ANC] chief whip who is in consultations with other political parties. Through these negotiations he remains alive to all possible compromises.”
Mbada said Mashatile was guided in his intervention by the principles agreed to by parties to the GNU. These included growing the economy, dealing with challenges of poverty, reducing the cost of living as well as building a capable state.
Godongwana tabled the budget earlier this month without the support of the majority in parliament, for the first time in the three decades of democracy.
The finance minister cut an initial hike of two percentage points down to 0.5% this year and a potential 0.5% in the next financial year after protests from GNU partners and other opposition parties.
The DA, the second-largest party in the GNU, remains opposed to any VAT increase — unless it was accompanied by “urgent reforms” to grow the economy at a faster rate.
The ANC needs just more than 200 of 400 votes to pass the fiscal framework in parliament on April 2.
It has 159 and needs 41 to push the budget through. The DA has 87, MK has 50, EFF 38, IFP 17, PA nine and the FF+ six seats in parliament. A host of smaller parties occupy between one and three seats each in the house.
The Patriotic Alliance (PA) said they would vote in favour of the budget.
The IFP said its support of the budget hinged on the VAT increase being a “temporary measure that would be removed as soon as more viable economic income streams are secured”.
The IFP also demanded that President Cyril Ramaphosa call an urgent cabinet meeting to discuss interventions to boost economic growth and to review spending patterns across all departments.
If the fiscal framework is not passed next week, 45% of the previous budget can still be used.
The Public Finance Management Act allows the executive to continue spending temporarily based on previous allocations until parliament approves the new budget. This provision ensures that essential government services continue without disruption.
The budget approval process requires the consideration and passage of several key bills by the National Assembly and the National Council of Provinces.
These include votes on the Division of Revenue Bill, the Appropriation Bill, the Rates and Monetary Amounts Bill and the VAT Amendment Act, which are all only expected to be finalised by the third quarter of next year.
The GNU comprises the ANC, DA, Rise Mzansi, Al Jama-ah, IFP, PA, GOOD, the Pan Africanist Congress (PAC), Freedom Front Plus (FF+) and the UDM. These parties represent 70% of the seats in the National Assembly.
If the DA, which has 87 seats in the National Assembly, does not compromise, the budget is unlikely to receive enough votes to pass, unless the ANC looks outside the GNU for support.
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