‘Policy uncertainty’ to blame for budget postponement
An economist has blamed the postponement of the budget speech on poor communication and lack of consensus within the Government of National Unity.
The national budget was meant to be tabled by Finance Minister Enoch Godongwana on Wednesday but was pushed back to 12 March in a shock move following internal pressures over tax hikes.
North-West University economist Waldo Krugel believes the GNU lacks an understanding of the sacrifices needed to address the country’s economic crisis.
Godongwana was due to deliver a speech in parliament outlining the government's fiscal priorities, including ways of raising revenue.
It included a 2% raise in value-added tax to 17%.
“There was opposition with the ANC, but now it is with the GNU, and it has not worked out. This speaks to policy uncertainties. The government has limited resources, and they have to achieve multiple goals,” Krugel said, adding that any VAT increase would need buy-in from the public.
Krugel said the increase would have a significant impact on consumers and households across the country.
“Even if he were to increase grants to compensate the poor for the tax increase, it would still hit the consumer very hard. And that is why the opposition did not agree and why a rethink is needed.”
Africa's most industrialised nation is grappling with how to fill its coffers after it lost US aid, in part due to a recent law that US President Donald Trump alleged allowed the government to seize land from white farmers.
The economy is faced with issues on multiple fronts, with inflation inching higher to three per cent in December.
The country has among the highest levels of inequality in the world, and poverty affects more than 60 per cent of its more than 63 million people.
The government said on Tuesday that unemployment edged downward in the last quarter of 2024 to about 32 per cent, but the figure remains among the world's highest.
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