Finance Minister Enoch Godongwana is expected to deliver his budget speech this coming Wednesday for the third time.
Previous attempts at passing the budget vote were hindered by internal friction within the Government of National Unity (GNU), where the African National Congress (ANC) and the Democratic Alliance (DA) clashed over the proposal to introduce a VAT increase.
In the second attempt, the speech included a proposed 0.5% VAT increase, with an additional hike suggested for next year. However, the proposal faced backlash, and the Finance Minister was sent back to the drawing board following an agreement with ActionSA to re-evaluate the fiscal framework, coupled with a Western Cape High Court ruling against the budget vote process.
Speaking on VOC’s NewsBeat, Frank Blackmore, Founding Director of EF Consult, expressed hope that proper planning had been done ahead of the upcoming speech and that the Finance Minister had meaningfully engaged with GNU partners—unlike in previous attempts.
“A lot of the tension is on what has been agreed by the GNU partners for this budget. I don’t think the previous mistakes would be made, such as the proposals in budget version three not being shared with the parties more broadly, because they have seen that if they take that approach, there is a possibility to block such a budget,” stated Blackmore.
Blackmore believes the upcoming budget must focus on cutting government expenditure, arguing that the Finance Minister has few alternatives to foster economic growth.
“In order to grow, you have to attract investment, and in order to do so, you have to consolidate fiscally. So you can’t go out and borrow more in the market. So, the only option left would be to cut expenditure, and the debate would be on what expenditure to cut. Hopefully it won’t be on public services; it will be on other goods such as traveling expenses, advertising budgets, etc.,” added Blackmore.
Listen to the full interview here:
