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SA's revised Budget 2025 puts coalition government to the test; Angola aims for DRC-M23 peace talks

SA's revised Budget 2025 puts coalition government to the test; Angola aims for DRC-M23 peace talks
Reuters
By Reuters
12 Mar 2025
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A revised Budget 2025 presented on Wednesday by South Africa’s finance minister was immediately rejected by major political parties, even though a proposed increase in value-added tax was sharply reduced.

Angola said on Tuesday it would attempt to broker direct talks between Democratic Republic of Congo (DRC) and Rwanda-backed M23 rebels in the coming days. It was not immediately clear if the Congolese government would take part.

SA Budget 2025 rejected by major political parties


A revised Budget presented on Wednesday by South Africa’s finance minister was immediately rejected by major political parties, even though a proposed increase in value-added tax was sharply reduced.

The revision was meant to end an impasse between Finance Minister Enoch Godongwana’s African National Congress and its biggest coalition partner, the Democratic Alliance, which rejected an initial proposal three weeks ago.

But the disagreement left no clear path to approval of the Budget.

The Treasury had initially proposed a hike of 2 percentage points to fund spending on health, transport and education. It revised that on Wednesday to a half-point increase this year followed by another next year.

VAT is currently at 15%.

“The DA made it clear to the ANC ... that we would not support any increase in taxes unless those increases were temporary,” said DA leader John Steenhuisen.

The official opposition, the uMkhonto Wesizwe party, and the Economic Freedom Fighters also rejected the new Budget – ruling out the small possibility that the ANC could turn to them for votes.

The Budget is the biggest test of the fractious Government of National Unity (GNU), formed after the ANC lost its parliamentary majority for the first time since the end of apartheid in 1994.

The ANC and the DA are ideologically opposed on many issues, yet have overcome occasional disputes to govern together so far.

But political analyst Busisiwe Seabe said the Budget row “sets a precedent for what we should expect: continued deadlocks, protracted negotiations and an overall difficulty in governing”.

Godongwana said “new and persistent” spending pressures required additional funding, and that raising VAT was the best answer.

In comments broadcast on Newzroom Afrika TV, President Cyril Ramaphosa said Godongwana had made the difficult choices, and now “Parliament will have to ... come up with solutions.”

Tax measures proposed in the latest Budget would generate an additional R28-billion in the fiscal year starting on 1 April, Godongwana said, less than half the R58-billion the Treasury had initially hoped for.

The revised budget documents showed that additional funds would come from contingency reserves.

Angola bids for direct talks between Congo and M23 rebels – presidency


Angola said on Tuesday it would attempt to broker direct talks between Democratic Republic of Congo and Rwanda-backed M23 rebels in the coming days.

It was not immediately clear if the Congolese government, which has repeatedly refused to hold talks with the M23, would take part.

Congo’s presidential spokesperson told Reuters authorities took note of this initiative, while a deputy spokesperson for M23 called it “a victory of reason” and confirmed the group’s presence at the negotiations.

The southern African country has been trying to mediate a lasting ceasefire and de-escalate tensions between the DRC and neighbouring Rwanda, which has been accused of backing the Tutsi-led rebel group.

Rwanda denies providing arms and troops to M23 rebels and says its forces are acting in self defence against the Congolese army and militias hostile to Kigali.

M23 rebels have seized east Congo’s two biggest cities since January in an escalation of a long-running conflict rooted in the spillover into the DRC of Rwanda’s 1994 genocide and the struggle for control of the country’s vast mineral resources.

Congo’s President Felix Tshisekedi paid a working visit to Angola’s capital Luanda and met his counterpart Joao Lourenco, Angola’s presidency said in a statement on Facebook.

“Angola, as mediator in the conflict in the east of Democratic Republic of Congo, will establish contacts with the M23, so that delegations from Congo and the M23 can hold direct negotiations in Luanda in the coming days,” the presidency said.

SA reduces Eskom debt relief package by a further R20bn


South Africa said on Wednesday that it would reduce its debt relief package for state power utility Eskom by a further R20-billion and would give some of its support in loans rather than taking on the company’s debt.

“Eskom is now in a much better financial position than in 2023 when the debt relief was originally announced. As a result of these improvements, we have decided to simplify the final phase of the debt relief package,” the National Treasury said in a revised annual budget.

Instead of taking on R70-billion of debt, the National Treasury will give Eskom R50-billion in loans.

The government previously reduced its support package by R4-billion after the utility failed to meet a deadline to dispose of its Eskom Finance Company.

Eskom said in December that it expected to turn profitable in 2025, its first profit in eight years.

“In summary, over the five-year period, government will have provided Eskom with loans to the value of R230 billion to assist the utility in repaying its debt. This is about R24 billion less than projected at the outset,” the Treasury said on Wednesday.

South Africa has struggled for years to overhaul Eskom, which is reliant on bailouts and has implemented rolling power cuts for more than a decade, curbing economic growth. DM

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