NATIONAL NEWS - The DA’s rejection of ANC Finance Minister Enoch Godongwana’s budget, tabled in Parliament on Wednesday, has raised fears that the Government of National Unity (GNU) could collapse, plunging the country into political instability and further economic distress.
According to an article published by The Witness, the GNU, in which the ANC and DA are major players, has been hailed by markets and experts as the country’s stabilising force amid prevailing geopolitical risks and South Africa’s uncertain political future.
In a joint article, University of the Free State (UFS) policy experts Dr Terrance Molobela and Dr Ambrose Du Plessis warned that the differences between the ANC and DA over the budget could lead to dire consequences for the country.
The UFS experts outlined three possible scenarios resulting from the standoff between the ANC and DA.
“In the first scenario, we imagine that the cabinet’s agreement is genuine, aimed at averting risks to public confidence and the broader market.”
“If the market-driven partners within the GNU recognise the overwhelming importance of a stable budget, they may choose to align their interests.”
However, should the ANC and DA fail to prioritise the country’s interests, the ANC could be compelled to drop the DA as a coalition partner, potentially bringing radical organisations such as the EFF into government.
“This scenario would fracture the GNU, erode trust, and create a toxic environment of distrust in coalition governance. If the ANC manages to secure its hold on power, it risks alienating the markets, which would likely lead to a downward economic spiral. The longer this instability persists, the more vulnerable the country will become to a potentially catastrophic collapse in investor confidence,” the experts said.
The current GNU stalemate could also result in the DA walking away from the coalition if the party decides it no longer serves its interests.
“This shift would trigger an intense debate about South Africa’s continued political and economic stability. South Africa’s economy, already vulnerable to shocks, would find itself in even deeper turmoil if this scenario were to play out. The markets would respond negatively, and the ripple effect would undoubtedly extend to the lives of everyday South Africans.”
DA leader John Steenhuisen made it clear yesterday that the party would not support the budget in its current form.
“The ANC has once again insisted on a budget with not one, but two VAT increases, which cumulatively will increase VAT by 1% over the next two years.
“The DA will not support the national budget presented by Finance Minister Enoch Godongwana in Parliament on Wednesday,” he said.
UKZN public policy expert Zakhele Ndlovu said the ANC had played into the DA’s hands by proposing a VAT increase.
“An increase in VAT will impact the poor negatively – the ANC’s core constituency. Given that there were other avenues the finance minister could have explored to raise additional funds, settling for a VAT increase suggests the ANC doesn’t care about citizens, who are already overtaxed. The other weakness in the budget, which the DA correctly pointed out, was the lack of focus on economic growth. The budget focuses more on consumption – something which led us to where we are now.
“The truth is that the government is overspending and, as a result, keeps borrowing – it’s not sustainable in the long term. Yet this budget does nothing to address these weaknesses,” he said.
Business Unity South Africa chief executive Khulekani Mathe said while the 2025 budget reflected a ‘delicate balancing act’ between growth, structural reforms and social spending, it also served as a reminder of the government’s past mistakes.
“It serves as a lesson in the consequences of the government’s failure to make early trade-offs between growth-enhancing expenditures and consumption spending.
“If the government had made decisions to curb consumption spending earlier, the need to increase VAT could have been avoided,” he said.
PSG Wealth head of policy and regulatory affairs Ronald King said it would be difficult for the government’s financial situation to improve if debt levels remain elevated.
“The accumulation of government debt crowds out private investment by raising interest rates. Private investment is essential to support faster economic growth, which would reduce the burden of existing debt and increase the capacity of the economy to service future debt,” he said.
Read original story on witness.co.za
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