INTRODUCTION
The 2025 national budget process in South Africa, which is set to be approved by the National Assembly on July 23, 2025, became a major point of contention for the Government of National Unity (GNU), a coalition formed following the ANC’s 2024 loss of its parliamentary majority. Among the many ideologically varied parties that make up the GNU are the Democratic Alliance (DA) and the African National Congress (ANC).
What Led to the Budget Issue
- Conflict Regarding VAT Increase: In order to generate more money, the original budget, which was presented in February 2025, suggested a 2% increase in Value-Added Tax (VAT). The DA vehemently opposed this proposal, claiming that the increase would disproportionately hurt South Africans in poverty. The ANC was stuck in a deadlock since it needed the DA’s backing to pass legislation.
- Several Budget Revisions: Finance Minister Enoch Godongwana lowered the proposed VAT hike to 0.5% in response to coalition tensions. Persistent opposition prompted legal challenges and additional discussions. Only conditional support was provided by smaller parties, and disagreements over procedures increased the coalition’s lack of trust.
- Coalition politics and scandals: The DA threatened to stop supporting department budgets headed by those involved, and tensions increased as a result of claims of corruption involving ANC ministers. In order to receive budget support, the DA also insisted that these ministers be removed.
The Turning Point and Resolution
- Ministerial dismissal: President Cyril Ramaphosa fired Higher Education Minister Nobuhle Nkabane, who was at the heart of a scandal and facing DA objections over her department’s budget allocation, just before the pivotal vote. This action was perceived as an attempt to rebuild inter-party trust and as a concession to the DA.
- After Nkabane was fired, the DA decided to back the Appropriations Bill, guaranteeing that the budget would pass the National Assembly with a landslide majority.
- Abandonment of VAT Increase: With cautious support from GNU partners, including the DA, the contentious VAT increase was completely abandoned in favour of an increase in the general fuel levy. Consensus on how to fund government operations without imposing regressive tax measures on the populace was made possible by this compromise
What This Means for the South African Government
- GNU Fragility Demonstration: The protracted budget dispute exposed the GNU’s vulnerability and the need for sincere dialogue and compromise. The ANC can no longer rule alone; careful coalition-building is now necessary to pass significant legislation.
- Enhanced Accountability and Transparency: At least one scandal-tainted minister was fired as a result of the DA’s demands for ministerial accountability. This shows that coalition partners can push for policy changes and accountability that address a broader range of voter concerns.
- Opportunities and Challenges for the Future: Although the immediate crisis was avoided, the coalition is still uneasy and several ANC ministers are still being accused of misconduct. The ANC is under increased pressure to consult and make accommodations for partners; otherwise, there is a risk that the GNU and the efficacy of the government will become unstable.
- Impact on Policy: The final budget redirected spending and slightly raised fuel taxes rather than raising taxes. In order to address long-standing underfunding, there is a renewed emphasis on eliminating inefficiencies and directing spending towards vital services like healthcare and education.
In summarry
The 2025 budget standoff between the ANC and DA within the GNU was resolved by high-level negotiation, the removal of contested ministers, and abandoning unpopular tax proposals. It exposed the challenges of coalition rule in South Africa, set new precedents for accountability, and underscored the importance of cross-party cooperation for stable governance
