By Simon Nare
Cabinet has provided Finance Minister Enoch Godongwana with options to increase the budget deficit, but it appears that the value-added tax increase of two percentage points is off the table.
In a statement released on Tuesday, the Cabinet said that in a special meeting convened on Monday, it concluded the process of considering inputs to Godongwana to fund the 2025/2026 financial year and medium-term budget.
It added that in compliance with the provisions of Section 27 of the Public Finance Management Act, Cabinet had mandated Godongwana to select from the discussed options and fund the Budget.
Although the press statement was scant on details, it did point out that when the minister revised the Budget, he must consider the fiscal constraints of the country, mitigate the impact on the poor and middle-income households and support economic growth.
“With the conclusion of the Cabinet input process into the Budget, the Minister of Finance and National Treasury are now set to finalise the Budget and table it before Parliament on 12 March 2025,” the statement read.
Cabinet convened a similar meeting more than a week to consider options to rework the Budget.
The first meeting allowed for broad discussions on the country’s fiscal constraints and the need for rapid implementation of the three key priorities of the 7th administration under the Government of National Unity.
In that meeting, President Cyril Ramaphosa set up a team of ministers led by the Deputy President Paul Mashatile to work with Godongwana and the Treasury to consolidate inputs for further consideration.
“The team led by Deputy President Mashatile and supported by National Treasury tabled a variety of options that were considered by Cabinet.”
The tabling of the budget was postponed at the 11th hour last month over disagreements on increasing VAT.
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