The Treasury’s processes regarding the national budget will undergo an overhaul to include political and technical input, to avoid future political deadlock similar to that which led to the three-week delay in the tabling of the budget.
Finance minister Enoch Godongwana tabled the R2-trillion budget on Wednesday in parliament, after weeks of consultations among coalition partners in the government of national unity (GNU).
Originally scheduled for February 19, the amended budget reflects widespread compromise among the 10-member coalition partners including a marginal VAT hike of 0.5 percentage points over the next two years and a R15.1bn reduction in social grant spending. Godongwana was required to delay tabling the budget last month after pushback from cabinet members, including the ANC.
Speaking at a pre-budget media briefing, Godongwana disclosed he had met the DA’s leadership on March 7 to discuss the contentious two percentage point VAT hike, which the DA had opposed.
“We have to ask if their [the DA’s] problem is tax or if their problem is something else,” Godongwana said, adding that the DA had submitted a memo to President Cyril Ramaphosa listing demands under which it would accept a VAT hike.
The demands include items that are outside the budget process, including amendments to the Expropriation Act and the Basic Education Laws Amendment Act, which were signed into law and are due to be implemented by DA ministers.
Before the formation of the GNU, the DA had opposed the legislation and continues to do so, despite the formation of the coalition government.
“They said they have lost battles and they want to win something,” Godongwana said.
Wider scrutiny of the budget process has been supported by the minister in the presidency, Maropene Ramokgopa, who previously told Business Day the GNU necessitated that more people be in the room when the budget was decided.
Instead of the R60.5bn in revenue, which was estimated due to the proposed two percentage points in VAT the marginal increase in VAT will now only raise R28bn in additional revenue in 2025/26 and R14.5bn in 2026/27.
Over the medium term, government spending increases at an annual average of 5.6%, from R2.4-trillion in 2024/25 to R2.83-trillion in 2027/28, budget documents show. These new pressures will be funded either through revenue increases, spending reductions or reprioritising, the Treasury said.
In his budget speech, Godongwana said the delay stimulated an unprecedented level of public debate about the difficult policy trade-offs the nation faces.
“A vital debate about which policies to fund and how to fund them, about which priorities to pursue now, and which ones we may need to delay in the context of our limited resources,” he said.
The Treasury said in budget documents that the government would reflect on improvements or reforms that could strengthen the budget process.
The review would include options for enhancing political and technical engagements on the budget, clarifying the role of certain structures that provide inputs to the budget, enhancing public consultation and improving information technology used to develop the budget presentation, it said.
The budget process before its tabling involves widespread consultations from the technical committee on the budget (composed of officials) tabled at the ministers’ committee. This committee considers key policy and budgetary issues that pertain to the budget process before they are tabled in the cabinet. The budget is then adopted by the cabinet and endorsed for tabling in the national assembly.
“Overall, the budget process is highly consultative, and departments are given the opportunity to make representations and submissions to inform the discussions in the technical committee on the budget,” the Treasury said.
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