DA backs South Africa’s third Budget

The head of the DA said talks about the nation’s revamped budget “are going very, very well,” a signal that the coalition government is resolving differences that derailed the National Treasury’s previous tax and spending proposals.  

What Finance Minister Enoch Godongwana “has succeeded in doing is a very good balancing act and I think we’re going to see a budget that will pass the house quite easily,” John Steenhuisen told reporters at the Nampo Harvest Day expo in the central Free State province Friday.

“We have to see it in its final form, but certainly, what I’ve seen today, I’m incredibly comfortable with,” he said of the third iteration of the budget proposals. “We’ll see no extra borrowing and no extra taxation.”

Steenhuisen’s comments follow an assertion by Deputy Finance Minister David Masondo on Thursday that he is “very confident that we’re not going to have budget 4.0” and that lawmakers will approve the proposals that they will hear on May 21.

The rand strengthened past 18 to the dollar for the first time since December earlier Friday, reaching 17.99. 

Last year’s election failed to produce an outright winner, with the African National Congress setting up a 10-party coalition in June, a month after the vote in which it lost parliamentary majority it had held since apartheid ended in 1994. 

The DA and African National Congress have since February sparred over issues including the Treasury’s proposal to hike value-added tax — all of which raised questions about the alliance’s durability. 

Tensions escalated last month, when the ANC enlisted the backing of parties that aren’t part of the coalition to pass the fiscal framework — legislation that underpins the budget — after the DA withheld its support. The DA then filed a lawsuit contesting the adoption of the legislation on procedural grounds.

The Treasury backed down, saying it would scrap the planned VAT hike, cut spending to fill a 75 billion-rand ($4.2 billion) gap in the budget over the next three years, and seek to settle the court case with the DA.  

Lawmakers and the Treasury face a tight deadline to complete the budget process, which legally must be wrapped up by the end of July. After Godongwana tables his proposals, parliamentary committees will have to adopt reports on related legislation that must be voted on by the National Assembly.

Earlier, Steenhuisen said Godongwana has made a “wonderful presentation” on the budget.  “I think we’re certainly getting there.”

“There really is a sense of collaboration and working together to put on the table a credible budget that will be a strong, stable platform for us to go out and seek confidence from our investors and also to start growing the economy and creating jobs here in South Africa,” Steenhuisen added.