On July 23, 2025, South Africa’s National Assembly approved the final and decisive component of the annual budget—the Appropriation Bill—bringing closure to months of political infighting that threatened to derail the country’s fiscal agenda. This key legislation, passed with 262 votes in favor and 90 against, authorizes the government’s R2.3 trillion spending plans for 2025/26, targeting debt reduction, social welfare, public services, job creation, and infrastructure rebuilding.
The journey to passage was marked by discord within the Government of National Unity—South Africa’s first-ever coalition led by the ANC and DA. Tensions flared over a proposed VAT increase, which the DA successfully opposed. Further friction erupted when the DA withheld support for departmental budgets until President Cyril Ramaphosa dismissed a minister embroiled in misconduct allegations. The dismissal of Higher Education Minister Nobuhle Nkabane was the decisive move that unlocked coalition support.
Finance Minister Enoch Godongwana conceded the budget process had been “difficult under a coalition,” prompting new Treasury guidelines to improve political alignment in future cycles. The passing vote included backing from the ANC, DA, IFP, ActionSA, and several smaller parties, while opposition voices from EFF and MK Party maintained dissent.
Markets responded positively: the rand strengthened slightly, trading around 17.56 USD, with benchmark bond yields stable—signals that investor anxiety had eased with the budget’s approval. However, analysts caution that sustaining this confidence depends on the coalition’s durability and adherence to fiscal discipline.
Although a VAT hike was scrapped, South Africans face a projected deficit of 4.8 percent of GDP and a public debt ratio expected to peak at 77.4 percent in 2025/26. The budget aims to cover this gap through cost containment and enhanced revenue, particularly via stronger SARS performance.
The narrow passage of the Appropriation Bill marks a turning point for the fragile coalition government. It temporarily resolves the immediate fiscal impasse, but the overarching challenge remains: can the coalition transform unity on paper into effective governance? With structural reforms awaiting attention, fiscal rigour required, and a tightly constrained economy, observers see the current legislative success as merely the first test—one that the Government of National Unity must pass to ensure stability and fulfill public expectations.
Credit: Africanews
