Finance Minister Enoch Godongwana says he has no intention of stepping down despite growing political pressure over the failed attempt to increase VAT, adding that the decision ultimately rests with President Cyril Ramaphosa.
“For as long as [President Cyril Ramaphosa] wants me to work, I’m going to work,” he told journalists at a media briefing on 30 April.
Godongwana has faced mounting criticism since National Treasury withdrew its revised plan to raise VAT by 0.5 percentage points. The reversal came after strong opposition from political parties, trade unions, civil society, and a legal challenge brought by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF).
Before the court could rule, Treasury abandoned the VAT increase altogether, citing a settlement with the DA. Days later, the High Court in Cape Town suspended the VAT hike and set aside the 2025 fiscal framework and revenue proposals, further fuelling criticism of Godongwana’s handling of the Budget process.
The EFF and the uMkhonto weSizwe (MK) Party have led calls for Godongwana’s resignation, accusing him of fiscal mismanagement. The MK Party has tabled a motion of no confidence in Parliament, while EFF leader Julius Malema has criticised the government for failing to pass a Budget nearly three months after the State of the Nation Address.
Speaking at the 30 April briefing, Godongwana said questions about his resignation must be viewed within the current political landscape. He explained that under previous ANC majorities, the Budget process was relatively straightforward: Treasury would prepare the Budget, present it to Parliament, and the ANC would approve it.
“Now we are in a coalition government,” he said. “That coalition government takes two forms. One, there is a GNU in Cabinet, but in Parliament, there are a number of political parties.”
Godongwana said he acted within his constitutional mandate in tabling the Money Bill under section 77 of the Constitution. But in the current multiparty environment, finding consensus had proved difficult.
“Because of the nature of the coalition politics, we couldn’t find consensus both in Cabinet and in the legislature,” he said. “I’m not going to put blame on anybody, but that process on its own… was messy. We all have learned from it.”
He argued it would be unfair to hold him solely responsible for the breakdown, because he had fulfilled his constitutional duties in a new and unpredictable political setting.
Godongwana said the decision on whether he remains in office does not rest with him.
“It lies with the president,” he said. “But I’m mindful of the fact that the president has been participating himself in this process. He understands the nature of the challenges we’ve been experiencing… So, I don’t think I can answer that question and say that’s my intention at the moment. No.”
Ramaphosa has defended the minister in the face of growing criticism.
According to TimesLIVE, Ramaphosa told attendees at COSATU’s Workers’ Day rally on 1 May that the recent controversy had led to a more inclusive and transparent Budget process.
“Unlike before, where it was a one-way process, now institutions, political parties, and citizens can provide input,” the president said. “We have learned valuable lessons from this, and it does not require the Minister of Finance to resign.”
Treasury eyes more inclusive Budget process
Godongwana said the government will revise the Budget process to better reflect South Africa’s evolving political landscape.
He acknowledged that the experience has highlighted weaknesses in the current system. “We have learned some lessons, I think all of us,” he said.
He confirmed that a new consultation framework is being planned, with a clear timeline. “Once the Budget is passed by Parliament, finally, we intend developing a new process which takes into account the current environment,” the minister said. “We have now agreed that we need to find a new process of consultation, which must start latest September, so that by the time we table the Medium-Term Budget Policy Statement (MTBPS), there’s broadly an agreed approach on the Budget over the medium term.”
He added that details of the new approach will be announced “at the appropriate time”.
National Treasury Director-General Dr Duncan Pieterse echoed these sentiments, noting that steps have already been taken to improve internal processes.
“Some of those changes were introduced in the last Budget cycle, where we changed, for example, the configuration of the technical committees that discuss some of the Budget elements, in order to create a more inclusive process and outcome,” he said.
According to Pieterse, further enhancements are under consideration and will be shared when the Budget is tabled on 21 May. These include integrating spending reviews more thoroughly into the Budget process to improve efficiency and transparency.
“We are currently considering further amendments to the technical process,” he said, “which will include things like how we embed more concretely processes around spending reviews, for example, into the Budget process itself, so that those spending efficiencies can come through more clearly.”
Fiscal credibility under scrutiny amid delays
Despite the uncertainty surrounding the 2025 Budget, National Treasury has moved to reassure the public and investors that government operations remain funded and that South Africa’s fiscal credibility is still intact – for now.
Until a new Budget is passed, government spending will continue under section 29 of the Public Finance Management Act (PFMA), which permits departments to use up to 45% of the previous year’s Budget during the first four months of the financial year. Thereafter, up to 10% can be spent each month. Similarly, in the absence of the 2025 Division of Revenue Act, provinces and municipalities can receive up to 45% of their allocated transfers in terms of the 2024 legislation.
Pieterse said although the parliamentary impasse has delayed the Budget’s adoption, service delivery has not come to a halt.
“Fortunately, we have a provision in the PFMA that says that the departments can continue to spend in line with the previous year’s Budget up until certain limits. And so, from a spending point of view, the business of government is continuing,” he said.
Pieterse acknowledged, however, that the credibility of South Africa’s fiscal policy is being closely watched by investors and credit ratings agencies.
“We had an opportunity to engage with investors on the sidelines of the spring meetings in Washington last week,” he said. “The feedback from investors is exactly that: fiscal credibility is measured by both the investors and by the rating agencies as a function of how effective we are as custodians of public finances.”
He emphasised that credibility would ultimately depend on whether the government meets the fiscal targets it has previously set.
“They will be looking to us for… are we able to meet the fiscal goals that we’ve set for ourselves and those we have outlined over the last few years, and we have consistently met those,” he said.
These targets include maintaining a growing primary surplus, stabilising the debt-to-GDP ratio – projected to peak in 2025/26 – and increasing investment in infrastructure and growth-enhancing expenditure.
“For them, the test is: will the new Budget that we are going to table meet those fiscal goals? And to the extent that it does, fiscal credibility is intact. To the extent that it doesn’t, it starts putting fiscal credibility under threat,” Pieterse said.
