Date set for Budget 3.0 in South Africa

South African Finance Minister Enoch Godongwana will return to parliament on May 21 to present his third attempt this year at getting a budget passed.

Godongwana is revising his spending plans after a dispute within the governing coalition over a proposed tax increase forced him to backtrack.

That left the National Treasury with a R75 billion shortfall to plug over the next three years.

“While the postponement of the budget’s passage is not ideal, the circumstances leading to this decision have highlighted the importance of meaningful engagement on fiscal matters,” said Godongwana.

The impasse over Godongwana’s previous two budget was triggered by objections from the Democratic Alliance — the second-biggest group in the coalition — to a planned increase in the value-added tax rate.

That raised investor fears that the business-friendly party might leave the alliance, providing an entry point for leftist groups like the Economic Freedom Fighters to join the government and jeopardize economic reforms.

Godongwana withdrew the proposed tax hike on April 24, leaving the alliance intact.

The about-turn has proved problematic for some retailers who are unable to reverse the amended pricing in their payment infrastructure before May 1, when the originally proposed VAT increase was supposed to come into effect.

A 10-party alliance took power after elections last year in which the African National Congress lost its parliamentary majority for the first time since the end of White-minority rule in 1994.

Its formation was heralded as a chance to boost job creation and feeble growth after years of under-performance. 

The dispute over the budget has drawn scrutiny of the Treasury’s credibility. Some political parties including the EFF have called for Godongwana’s resignation — a call he’s rejected.

Lawmakers and the Treasury now face a tight deadline to complete the budget process, which legally must be wrapped up by the end of July.

After Godongwana tables the budget, parliamentary committees will have to adopt reports on related legislation that must then be voted on by the National Assembly.