On Wednesday, as it became clear that parliament would pass the budget, the rand began a gradual slide against the US dollar and other major currencies. By 5.10pm it was trading at R18.83 against the greenback before recovering somewhat to R18.73.
Equities were also down, with the JSE All-Share Index dipping almost 1% at close.
But despite major disagreements over finance minister Enoch Godongwana’s contentious budget — which has already been rejected once by the cabinet — the ANC was able to get it over the line thanks to the support from ActionSA, the IFP, Patriotic Alliance, Rise Mzansi, the UDM, PAC, Bosa, Al Jama-ah and the GOOD party.
Its main partner in the government of national unity, the DA, failed to halt a vote on the fiscal framework that underpins economic policy, adjusts government spending and taxes and allocates money to national departments, provinces and municipalities.
This means the GNU in its current configuration is all but dead. At the heart of the kerfuffle was not just a contentious decision by Godongwana to increase VAT by 0.5 percentage points over the next two years to plug a R112bn revenue shortfall, but the way the ANC went about seeking support from parties outside the GNU for the fiscal framework to pass.
Having voted against the budget, and in announcing its intention to file papers in the Western Cape High Court challenging the passing of the 2025/26 budget, the DA cannot expect to continue being part of the GNU.
In unusual agreement with the EFF and the MK Party, the DA contended that a joint meeting of parliament’s standing and select committees on finance should not have adopted a report endorsing the fiscal framework.
It was at this meeting on Tuesday where ActionSA, IFP and the ANC introduced a controversial caveat requiring National Treasury to consider alternative ways to raise revenue other than a VAT increase and not adjust personal income tax brackets to make up for inflation.
The recommendation reads: “The fiscal framework tabled by the finance minister is subject to the strict condition that the National Treasury facilitates the receipt of substitute revenue proposals from the committee, together with corresponding expenditure savings, that will form the basis of alternative revenue proposals, instead of: a) the proposed 0.5 percentage point increase in VAT; (b) the failure to adjust personal income tax brackets in line with inflation.”
The DA, EFF and MK Party argued passionately but in vain that adding such a recommendation to the final report was not compliant with the standing rules of parliament. They also contended that the committee never got to approve or reject the report.
The impasse is headed to the courts, though in the past judges have shied away from encroaching on a separate arm of government.
Having voted against the budget, and in announcing its intention to file papers in the Western Cape High Court challenging the passing of the 2025/26 budget, the DA cannot expect to continue being part of the GNU. Its cabinet ministers should start clearing their offices. President Cyril Ramaphosa and his deputy Paul Mashatile were clear in their address to the ANC caucus on Tuesday evening that the DA can’t be in a government whose budget it voted against.
In just under 10 months, the GNU is unravelling quite spectacularly.
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