411
DA’s Budget Rejection Puts South Africa’s Government of National Unity at Risk
South Africa’s Government of National Unity (GNU) is facing a serious crisis after the Democratic Alliance (DA) rejected Finance Minister Enoch Godongwana’s budget, tabled in Parliament on Wednesday. The decision has raised concerns that the coalition could collapse, plunging the country into political instability and further economic distress.
The GNU, which includes both the African National Congress (ANC) and DA, has been widely regarded as a stabilizing force amid global geopolitical uncertainty and South Africa’s fragile economy. However, growing tensions between the two parties, particularly over the proposed VAT increases, are testing the coalition’s durability.
Why Did the DA Reject the Budget?
DA leader John Steenhuisen made it clear that his party would not support the budget in its current form, citing concerns over tax hikes and a lack of focus on economic growth.
“The ANC has once again insisted on a budget with not one, but two VAT increases, which cumulatively will increase VAT by 1% over the next two years,” Steenhuisen said. “The DA will not support the national budget presented by Finance Minister Enoch Godongwana.”
Economic experts have echoed these concerns, warning that a VAT increase would hit lower-income South Africans the hardest, exacerbating the country’s financial struggles.
Political and Economic Fallout of the Budget Standoff
University of the Free State (UFS) policy analysts Dr. Terrance Molobela and Dr. Ambrose Du Plessis have outlined three potential outcomes of the standoff between the ANC and DA:
-
Coalition Holds, but With Strains – If both parties recognize the need for stability, they may compromise to avoid a market backlash. However, internal tensions could weaken governance.
-
DA Leaves the GNU – If the DA feels sidelined, it may exit the coalition, sparking uncertainty and undermining investor confidence.
-
ANC Seeks New Partners – The ANC could replace the DA with parties like the EFF, which could create a more radical policy environment and further destabilize the economy.
Public policy expert Zakhele Ndlovu believes the ANC’s decision to push for VAT hikes played into the DA’s hands, weakening the GNU’s unity.
“An increase in VAT will impact the poor negatively—the ANC’s core constituency. There were alternative revenue-raising measures, yet the ANC chose the most politically damaging one,” Ndlovu said.
Market and Business Reactions
Business Unity South Africa (BUSA) CEO Khulekani Mathe described the budget as a “delicate balancing act” but noted that the government’s failure to curb spending earlier had made the VAT hikes inevitable.
“If the government had made decisions to cut non-essential spending earlier, the need to increase VAT could have been avoided,” Mathe said.
PSG Wealth’s Ronald King warned that high debt levels continue to pose a serious risk to South Africa’s economic recovery.
“The accumulation of government debt crowds out private investment by raising interest rates. Private investment is essential to support faster economic growth, which would reduce the burden of existing debt,” King explained.
What’s Next for the GNU?
With the DA refusing to back down, the future of the GNU hangs in the balance. If no resolution is found, South Africa could face a period of intense political and economic uncertainty. The coming weeks will be crucial in determining whether the coalition can survive this crisis or whether the country will be forced into yet another political realignment.
Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram
For more News in Johannesburg, visit joburgetc.com
