Godongwana addresses complexities of budget formulation in challenging political climate

Finance Minister Enoch Godongwana has described the process of formulating this year’s Budget as a daunting challenge, exacerbated by South Africa's fragmented political landscape.

This comes as Godongwana tabled what appeared to be a market-friendly budget after three attempts following disagreements within the Government of National Unity over the proposal to increase the value-added tax (VAT) in a bid to raise at leats R60 billion for the fiscus.

Speaking candidly at a press briefing before tabling the 2025 Budget Review in Parliament, he underscored the learning curve experienced by those involved in this year’s budgeting process.

Godongwana pointed out that the electoral outcome had created a unique opportunity for a consultative process among political factions.

However, he said the excitement over the potential to amend the budget had overshadowed a crucial aspect of the law which stipulated specific procedures that must be followed when altering the budget.

Godongwana mentioned a notable instance when one political party presented a staggering proposal, suggesting amendments that would raise at least R100 billion for the fiscus.

He said the enthusiasm to explore this comprehensive approach was met with the understanding that any viable proposal must be grounded in fiscal reality and a thorough analysis of the existing budget.

"So, that process on its own has been a learning process for everybody, and therefore had to delay the budget. And as such, everybody said the Minister of Finance has messed up and he must go. But we've not looked at the nitty gritties of why that process is so complicated, even for political parties," he said.

"The message is that we have all learned the process is cumbersome. And it has got to be cumbersome because the manner in which it was tailored. It was tailored in such a manner that it should not be easy to just see parties augmenting the budget. It should be difficult, because people have got to comply with that. Treasury also has to comply fiscal prudence, macroeconomic stability, all of those things."

Godongwana said this highlighted the delicate balance required to maintain government stability while effectively addressing the needs and demands of various political constituencies.

"Anybody who has messed the budget has got to think carefully about all of those issues. So, it has not been an easy task for all of us. We have got to learn in dealing with all of these political parties," he said.

"So, we're all in a learning phas. Moving into the next financial year, I think we'll be able to manage quite effectively, I'm quite confident. And that process is going to start as soon as we conclude this last budget, this budget."

As a result of numerous delays to table the Budget, the National Council of Provinces will be dealing with the Appropriation Bill only on 30 July, the last day of the allowable period in which the government can continue spending in the current fiscal year based on last year's budget.

If the budget is not passed beyond 30 July, government departments can spend only 10% of their budget, which could pose a problem for departments as their wage bill alone does not cost less than 10%.

"So, what that means [is that] if we don't finish the budget from the end of August, we're going to experience what the Americans are experiencing, which is fascination, closing government," Godongwana said.

Amidst this whirlwind, concerns of inadequate spending during this interim period have been raised about the laws governing the budget as provinces such as KwaZulu-Natal have struggled to pay suppliers. However, Godongwana said such assertions were devoid of the truth.

"It's being mischievous. I'm saying everybody can spend budget now, 40% of your budget. To say you can't spend is being mischievous to say this," he said.

"Both the PFMA as well as the Division of Revenue Act has a provision for spending to continue in the absence of a budget being passed. So, that certainly is not a constraint on the ability of provinces to spend."

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