As the approval of the 2025/26 budget hangs by a thread, the DA’s top leadership began considering the ANC's final offer on the budget on Wednesday, which includes whether the party should remain in the coalition government.
Should the DA reject the fiscal framework on Wednesday, which includes a contentious 0.5 percentage point VAT hike and recommendations to the Treasury that it find alternative revenue streams within 30 days of the legislation’s passing, it sets the stage for the party’s possible exit from the government of national unity (GNU).
Business Day understands that during a meeting of the ANC’s parliamentary caucus on Tuesday night following the adoption of the fiscal framework by parliament’s two finance committees, President Cyril Ramaphosa and his deputy, Paul Mashatile, both noted the DA had “defined itself outside the GNU” should it not vote for the budget.
The DA had previously stated that the ANC’s move to find support for the budget outside the GNU meant it had “crossed [sic] a line in the sand”.
The ANC and the DA are the two largest members of the 10-member coalition government holding 159 and 87 seats in the national assembly, respectively.
Business Day previously reported that ActionSA and the ANC struck a last-minute deal to pass the fiscal framework. The proposal by ActionSA MP Alan Beesley also included the May 1 VAT increase of 0.5 percentage points be scrapped. However, the law provides the VAT increase and the date of commencement will take effect as announced by the minister of finance, unless parliament passes a law annulling the announcement.
The ANC’s final offer to the DA includes various measures to grow the economy and a review of legislation including the Public Procurement Act.
Meanwhile, as the GNU stability remains on the brink of collapse over the budget impasse, the Treasury has said that government departments may spend up to 45% of the previous year’s total appropriated amount from the National Revenue Fund.
However, the funds that may be withdrawn from the Revenue Fund, in line with section 29 of the Public Finance Management Act, may not be used for new programmes but “may be utilised only for services for which funds were appropriated in the previous annual budget or adjustments budget”.
The 2025 budget was tabled on March 12 and is under consideration by parliament. There’s a legal framework that allows budgets to be finalised even after the start of the financial year.
The Appropriation Bill must be passed by July 31 and there are provisions for government funding in the interim.
“Any new spending programmes, projects or policy adjustments may only commence after the Appropriation Act is enacted. As a result, the public should not be concerned about the delivery of critical government services, including, for example, the payment of social grants, while the parliamentary process for the 2025 budget is ongoing,” the Treasury said in a statement.
“In other words, even though the fiscal year starts on April 1 every year, the Appropriation Bill is always passed later. This situation means that every year, departments incur spending before the Appropriation Act takes effect. Therefore, as in previous years, government departments will continue to spend as normal because funds may be withdrawn from the National Revenue Fund for the requirements of departments from April 1 2025 until the Appropriation Bill for the 2025/26 financial year is passed by parliament.”
With Linda Ensor
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