South Africa abruptly cancels budget speech amid dispute among coalition

The South African government’s annual presentation of its budget was abruptly cancelled on Wednesday and rescheduled for next month over a dispute among parties in the governing coalition.

The finance minister’s budget speech normally takes place in February.

Parliament Speaker Thoko Didiza said it was the first time that the presentation had been cancelled over such a disagreement in the 31 years of South Africa’s democracy after the end of the apartheid system of white minority rule in 1994.

South Africa has a 10-party coalition in government after the long-ruling African National Congress, or ANC, lost its majority in an election last year for the first time since apartheid ended.

The Democratic Alliance, the country’s second biggest party, said the budget postponement was over a 2% increase in value-added tax proposed by the ANC. The DA said in a statement that the tax increase “would have broken the back of our economy”.

The budget delay came just over a week after US President Donald Trump ordered US aid and assistance to South Africa to be cut over a contentious land law.

That move by Mr Trump was expected to put pressure on South Africa’s government to find funds to plug gaps, especially in the public health service.

South Africa was already impacted by Mr Trump’s 90-day global freeze on US aid.

Africa’s most advanced economy has hardly grown in recent years.

Finance minister Enoch Godongwana, who was meant to present the budget to Parliament, told reporters that the South African government was facing fiscal challenges.

“Do we borrow more, and what are the implications of that?” Mr Godongwana said.

“Do we continue cutting expenditure? What are the implications of that? Do we raise tax and what are the implications of that?”

“There is general agreement that in the current environment, we need to find ways of funding our priorities.”

The opposition Umkhonto we Sizwe Party said the government’s failure to propose a budget was proof that “this country has no leadership”.

Most recently the ANC and the DA disagreed over the passing of the Land Expropriation Act, which empowers the government to seize private land for public benefit.

The parties have also fallen out over an education Bill, which would give the government more control over white minority language schools.

The Black Business Council, which advocates for black-owned businesses’ inclusion in the country’s economy, has cautioned that the budget postponement might cause uncertainty among investors.

“We are busy dealing with the Trump issue, and we are working on sending envoys to the world to say (South Africa) is intact, but when you have something like this that you can control, and you just basically throw your arms in the air, it doesn’t bode very well for South Africa and for the government,” said the council’s chief executive Kganki Matabane.