South Africa’s Coalition Faces Crisis Over Budget Vote

South Africa’s parliament has passed a crucial budget bill despite fierce resistance from a key coalition partner, the Democratic Alliance (DA), intensifying fears that the fragile alliance could fracture.

At a tense sitting in Cape Town on Wednesday, the National Assembly approved the fiscal framework—outlining economic policy, revenue projections, and spending limits—by a razor-thin margin of 194 votes to 182.

However, the approval came amid sharp disagreements, particularly over Finance Minister Enoch Godongwana’s contentious proposal to hike value-added tax (VAT).

The DA, South Africa’s second-largest party and a key player in President Cyril Ramaphosa’s government of national unity (GNU), had demanded a firm commitment to scrap the VAT increase, calling instead for policies to stimulate economic growth and review government expenditure. Their objections, however, were overruled.

While the DA has not explicitly threatened to exit the coalition, its defiance has rattled markets, with the rand slipping 1.9% against the dollar, trading at R18.82 by 6:52 pm—the weakest closing level since January 16.

Should the DA walk away, the GNU’s numbers in parliament would shrink to a precarious 200 seats, forcing the ruling African National Congress (ANC) to seek alliances with more radical parties, such as the Economic Freedom Fighters (EFF), known for advocating sweeping nationalization policies.

The Freedom Front Plus, another coalition member, also voted against the fiscal framework, further weakening the alliance’s stability.

Adding to the political drama, DA leader John Steenhuisen announced that his party will challenge the budget’s passage in the High Court, arguing that procedural rules were not followed.

“Tuesdays’ sitting of parliament’s finance committee was not compliant with the standing rules,” Steenhuisen stated.

“We look forward to this matter being addressed in court for the benefit of all South Africans who do not agree to this budget.”

While the budget process still allows room for compromise, tensions within the GNU are reaching a boiling point.

Finance Minister Godongwana was blunt in his criticism of the DA’s stance:

“For the GNU, I don’t think you can vote against a budget and tomorrow want to be part of its implementation. It can’t be. We’ve got to draw a line on that point.”

The GNU, established by Ramaphosa in June last year after a deadlocked national election, brought together ideologically diverse parties, granting the DA six cabinet positions.

Divisions are however deepening beyond just budgetary concerns.

The DA has also clashed with the ANC over universal health insurance, changes to education policy, and the controversial land expropriation law signed by Ramaphosa in December.

The budget plan, unveiled by Godongwana last month, includes a VAT hike of 0.5 percentage points in May, with another increase in April 2026—aimed at raising R75 billion ($4 billion) over three years.

The Treasury argues that other tax options, such as corporate or personal income tax hikes, would deter investment or fail to generate sufficient revenue.

Yet, with the DA’s legal challenge and coalition fractures widening, the road ahead remains uncertain.

Despite the turmoil, presidential spokesperson Vincent Magwenya sought to reassure the public, with Bloomberg reporting that “the president has said that the government will remain stable, but he has made no comment about the structure of the GNU.”

With the fate of the coalition hanging in the balance, South Africa’s political and economic future is now more unpredictable than ever.