South Africa’s parliament approved a controversial budget framework on Wednesday, following a heated session where the Democratic Alliance (DA), the main coalition partner of the ruling African National Congress (ANC), rejected the bill, arguing that it fails to promote economic growth and employment.
The budget was passed with 194 votes in favour and 182 against, with no abstentions, as lawmakers largely voted along party lines. The ANC, which no longer holds an absolute majority, garnered support from smaller parties to ensure the bill’s passage, despite opposition from the centre-right DA, South Africa’s second-largest party.
One of the most contentious elements of the budget is the one percent increase in VAT over two years, which will bring the rate up to 16 percent by 2026-27. The DA vehemently opposed the hike, claiming that it would make life more expensive for South Africans, particularly those already struggling with rising costs.
The budget was initially slated for presentation in February but was delayed due to a lack of agreement among lawmakers, sparking weeks of intense negotiations. The revised draft presented by Finance Minister and ANC member Ebrahim Patel last month was immediately rejected by the DA.
Following the passage of the budget, DA leader John Steenhuisen announced that the party would challenge the bill in the Western Cape High Court, accusing smaller parties of handing the VAT increase to the ANC “on a platter.” Steenhuisen criticised the government for pushing through a budget that did not address economic growth or job creation, while accusing the ANC of tax increases that would only worsen the lives of ordinary South Africans.
The DA also claimed that the bill had been adopted in an “unlawful and unconstitutional” manner, alleging that a proposal by one party was accepted without considering other proposed amendments, which they argued was a legal shortcoming in the process.
South Africa’s economy has faced numerous challenges, including low growth and high unemployment. Last year, the country’s economy grew by just 0.6 percent, while inflation stood at 4.4 percent. The power crisis, caused by years of mismanagement and corruption in the energy sector, continues to hold back economic progress, alongside the high unemployment rate, which now exceeds 32 percent, with youth unemployment particularly severe.
In addition, South Africa’s economy has been affected by widespread inequality, a legacy of the apartheid system, and a drought that heavily impacted the agricultural sector. However, the International Monetary Fund (IMF) has forecasted growth of 1.5 percent for the country in 2025.
With ongoing tensions within the ruling coalition and continued economic struggles, the ANC will need to address mounting criticism over the budget and work towards finding solutions to tackle the country’s economic challenges.
