SA budget approval in sight after tax wrangle ends

South Africa’s National Assembly approved the Treasury’s fiscal framework, bringing the adoption of the annual budget a step closer after months of wrangling over tax increases.

The framework, which establishes economic policy, revenue projections, and limits on government spending, was approved by 268 votes to 88, with two abstentions, at a sitting in Cape Town on Wednesday. The legislature is due to process other laws that underpin the budget by the end of next month.

Process will be handled differently

“We have had a painful journey to arrive to this date where the fiscal framework is being approved,” Finance Minister Enoch Godongwana told lawmakers ahead of the vote. “From the Treasury perspective we have drawn a number of lessons” about how the budgeting process should be handled in future, he said.

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South African lawmakers back framework underpinning budget
Parlement: Groen of rooi lig vir die begrotingsraamwerk

Godongwana initially proposed raising value-added tax by two percentage points in his first iteration of the budget in February, but halved the increase three weeks later after encountering political opposition from within the nation’s 10-member governing coalition. He scrapped it completely in the latest plan unveiled last month, and proposed cutting spending and increasing fuel levies instead.

The Democratic Alliance, the second-largest member of the administration that was established almost a year ago after elections failed to produce an outright winner, led the campaign against the VAT hike and contested it in court.

Rand and bonds stronger

The tussle over the budget strained the relations within the so-called government of national unity, and its resolution has eased concern among investors and helped fuel a rally in the rand and the nation’s bonds.

© 2025 Bloomberg

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