The postponement of South Africa's 2025 Budget speech until March 12th has ignited discussions about the functionality of the Government of National Unity (GNU). A proposed 2% VAT increase became a point of contention between the ANC and other parties, ultimately leading to the unprecedented delay. While some analysts view this as a growing pain of a new era of power-sharing, others express concern about the lack of strategic planning and potential economic implications.
The postponement of South Africa's budget speech until March 12th, 2025, has sparked a debate about the effectiveness of the government of national unity (GNU). The initial embarrassment of delaying the speech, scheduled for February 19th, could have been avoided if the ruling African National Congress (ANC) communicated with the speaker in advance regarding their inability to reach consensus on a proposed 2% VAT increase.
This incident highlights the complexities of navigating power-sharing politics within the GNU, where the ANC must now negotiate with other parties, a departure from the previous practice of the budget speech being followed by rubber-stamp approval from the Cabinet. Economic analysts offer diverse perspectives on the postponement. Professor Bonke Dumisa, an independent analyst, criticizes the ANC for not anticipating the divisive nature of the VAT increase and postponing the speech earlier. He argues that the ANC, with its long history in power, should have foreseen and managed this situation more effectively. Professor Jannie Rossouw, a visiting professor at the Wits Business School, refrains from commenting on the postponement due to his involvement in a locked-down group of economists and journalists on the morning of the scheduled speech. George Herman, Chief Investment Officer at Citadel, describes the postponement as unprecedented in South Africa's democratic history, emphasizing the uncertainty and speculation it creates in the market. He acknowledges the significance of the GNU's first-ever negotiation process for the budget, but views the incident as a symptom of the ANC's lack of open dialogue with other parties and their persistence in following a previous, less inclusive approach. Frank Blackmore, Lead Economist at KPMG, points out the immediate negative reactions from the market, bond, and equity markets, suggesting a lack of preparedness and strategic planning for the economy's future trajectory. Jurgen Eckmann, a wealth manager at Consult by Momentum, highlights the temporary volatility in the market but emphasizes the importance of viewing this as an opportunity for greater accountability and diverse perspectives within the decision-making process. Professor Raymond Parsons, an economist at the NWU Business School, warns that the unprecedented postponement will have unintended consequences for South Africa's political economy. However, he expresses optimism that the March budget, if focused on growth and job creation, will ultimately be worth the delay if it leads to mutually agreed upon 'trade-offs' and improved outcomes for the economy. He concludes by stating that the controversy surrounding the tax burden underscores the long-standing issue of insufficient economic growth in the country
SOUTH AFRICA BUDGET VAT GOVERNMENT OF NATIONAL UNITY ANC ECONOMIC POLICY POLITICAL ECONOMY MARKET REACTION
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