Cabinet finalises agreement on the 2025 budget

Cabinet has reached an agreement on the budget for the 2025/2026 financial year, which was postponed in February over objections to the proposed two percentage point VAT increase. 

The Cabinet held a special meeting on Monday, 3 March, to consider inputs by members of the Cabinet into best possible options, under the circumstances, to fund the budget and the medium term. 

CABINET APPROVES 2025 BUDGET 

Following the unprecedented postponement, President Cyril Ramaphosa set up a team of Ministers led by the Deputy President Paul Mashatile worked with the Minister of Finance Enoch Godongwana and his National Treasury Team to consolidate cabinet inputs for further consideration.

In a statement, government said the team led by Mashatile and supported by National Treasury tabled a variety of options that were considered by the Cabinet in compliance with the provisions of section 27 of the Public Finance Management Act (1 of 1999).

Cabinet reportedly mandated Godongwana to select from the discussed options and fund the budget in a manner that takes into consideration:

• The fiscal constraints of the country;
• Mitigates the impact on the poor and middle income households; and,
• Supports economic growth.

As the Cabinet input process into the Budget has been concluded, Godongwana and National Treasury are set to finalise the budget and table it before parliament on 12 March.

In contrast, Democratic Alliance (DA) leader John Steenhuisen took to X (formerly Twitter) to inform South Africans that no agreement has been reached yet.

“Constructive discussions on the budget are ongoing. There is no agreement yet, but we are working towards a resolution by 12 March,” he posted.

DA ACCUSES ANC OF LOBBYING EFF TO PASS VAT-BASED BUDGET

As previously reported, the Value Added Tax (VAT) currently 15% was set to increase by two percentage points to 17% and this has unsettled some parties in the GNU, especially the DA.

Following uproar over the proposed increase in the 2025 budget, which will inarguably worsen the situation for South Africans who are already financially stretched due to the high cost of living, DA spokesperson on Finance Mark Burke has alleged that the ANC insists on its campaign to increase VAT.

Ahead of Monday’s meeting, Burke said the Blue Party refuses to be held hostage or intimidated by the ANC’s blatant threat to approach the EFF which is not part of the GNU to pass the budget.