By Lehlohonolo Lehana.
Minister in the Presidency and Cabinet spokesperson Khumbudzo says the delay of the budget speech, was a cabinet decision and not a result of opposition to the proposed 2% VAT hikes in particular the Democratic Alliance (DA).
Ntshavheni told journalists at a media briefing in Cape Town on Wednesday.
“The differences were across parties, including ministers who you would call ANC ministers, so it’s not a one party issue, and there is no need for the minister to engage with the self and outside of what the department does. Part of why we requested a delay as cabinet is that we want to meet as cabinet and have a substantive discussion on the budget,” she said.
“It’s the cabinet ministers who did not approve the budget as it was being tabled, and said they needed more time to engage with the issues of what the minister normally calls the trade-offs. As cabinet, we have not finalised the budget, and therefore we could not proceed to the house for the minister of finance to table the budget.”
She said the focus of the cabinet discussion was not about party politics.
“It’s about what is the balance that we need to achieve between managing our fiscal framework, managing our ability to protect the interest of South Africans in general, and the poor and how do we deal with the inequality that confronts all of us. So it is never a DA, ANC issue,” she said.
The DA which is the second-biggest party in the coalition, was one of the most vocal critics of the proposed budget.
Its leader John Stenhuisen said the party could not in “good conscience” agree to a VAT increase from 15% to 17% as it would have “broken back the back of our economy”.
VAT was last increased in 2018 from 14% to 15%.
Minister of finance Enoch Godongwana told journalists that the planned increase was mentioned in the cabinet last week.
The budget will now be tabled on 12 March, following further discussions to iron out differences, he said.
“Cabinet is united in the view that the budget must strike a balance between the interests of the public, economic growth and fiscal sustainability. Furthermore, the budget is produced and presented before the National Assembly according to rules outlined in the Public Finance Management Act.”
He said section 27 of the Act requires that the annual budget be tabled prior to the start of the financial year or “in acceptable circumstances” on a date as soon as possible after the start of the financial year, as the finance minister.
“Therefore further discussion can take place in preparation for a new or amended budget to be tabled on 12 March,” Godongwana said.
The opposition Economic Freedom Fighters (EFF) expressed dismay over the postponement, saying it was a “symptom of weak, indecisive, and opportunistic governance”.
But the DA hailed the postponement as a “victory”, and said it would push for a budget that is “better for growth and employment”.
Treasury director general Duncan Pieterse said the treasury was concerned about the sustained weaknesses in the rand, which had depreciated after the postponement of the budget speech. He said communications about the incident had already been sent to the country’s key bond holders.
“What we are concerned about are sustained weaknesses in the currency because of what that means for the economic indicators that are important to us from a fiscal framework perspective,” he said.