South Africa’s 2025 budget speech cancellation at the last minute on Wednesday will delay policy implementation and was likely to impact markets, analysts said as business leaders expected Finance Minister Enoch Godongwana to hike some taxes.
Parties under South Africa’s government of national unity (GNU) disagreed on the looming tax increases, with the DA saying it was opposed to an increase in Value Added Tax.
The 2025 budget speech in South Africa has been canceled.
This creates market uncertainty, delays policy implementation, and impacts investor confidence. Markets may react with declines in stock prices and currency fluctuations.
The Rand was trading at R18.52 shortly after 3pm on Wednesday afternoon, a slight dip on its intra-day trade.
However, analysts expected the rand to respond to the budget postponed, the first time South Africa has had to take such a drastic action.
“This (postponement) creates market uncertainty, delays policy implementation, and impacts investor confidence. Markets may react with declines in stock prices and currency fluctuations,” wrote Stefanie Heystek, co-founder of Brenthurst Wealth Management.
Business leaders expect that the 2025 budget will introduce some tax increases. However, some are hopeful that there will be disciplined resource management under this year’s budget which has now been postponed to a later date next month.
“Apparently we're going to see changes to the VAT regime, which is unfortunate,” said DRDGold CEO, Niel Pretorius.
He said though that he was hoping that there wont be any “unpleasant surprises” such as new taxes on businesses.
“Let's hope that the focus is on discipline in terms of spending, as opposed to looking at additional sources for undisciplined spending,” he said on Tuesday.
John Steenhuisen, leader of the DA said on Wednesday that the postponement of the Minister of Finance’s 2025/26 Budget Speech due to the DA’s opposition to the ANC’s VAT increase was “a victory for the people of South Africa, as it prevents the implementation of a 2% VAT increase that would have broken the back of our economy”.
South Africa’s budget statement 2025 now slated for March 12 will be eagerly awaited against the backdrop of “structural reforms are progressing” despite “logistical bottlenecks persisting” amid amid operational improvements becoming increasingly evident,” said Casey Sprake, economist with Anchor Capital this week. This was however being overshadowed by external volatility and the threat of a bloated fall-out with the United States after President Donald Trump moved to cut aid to SA.
BUSINESS REPORT