MBABANE (20 February 2025): What would have happened if South Africa had presented its budget today and increased it’s VAT to 17%.
The decision to postpone its budget speech saved Eswatini from a potentially significant embarrassment which would have forced the Kingdom to do the same after presenting a budget that retained VAT at 15%.
For the first time, Eswatini took the unprecedented step to present the Kingdom’s budget a week ahead of that of South Africa its giant neighbour, most important trading partner key economic stakeholder.
Traditionally, Eswatini delays presenting its budget until it is able to fully understand budget implications presented by South African policy directives in its budget. These have the potential of significantly altering the Kingdom’s own policy trajectory.
This morning, South Africa postponed the minister of finance’s budget speech at the last-minute following intense political pressure to remove a 2% increase that would have raided VAT to 17%.
South Africa’s budget will now be presented on 12 March 2025 after consultations with all social and political partners.
The postponement rescued Eswatini from a potentially disastrous embarrassment. Each time South Africa increases its VAT rate, Eswatini is forced to do the same to simplify VAT administration, especially at the border where Eswatini imports, mostly of supermarket stock and food is handled.
In recent days several political parties argued against raising VAT, as did trade unions, lobby groups, and civil society organizations.
At a media briefing this afternoon, Minister in the Presidency Khumbudzo Ntshavheni sought to portray the decision as a collective one by Cabinet, rather than the result of pressure from one party.
Saying that the DA had forced the postponement was a “completely wrong” assumption, she stated, adding that even ANC ministers opposed the proposed increase. It was not a “DA vs ANC” decision, she said, but a “Cabinet decision.”
The DA, however, clearly sees the postponement as a political win, releasing a statement saying it “demonstrates the DA’s muscle within the Government of National Unity.”
The EFF and MK, on the other hand, argued that the budget should have been delivered so Parliament could at least hear Treasury’s plans.
Jm/today/20.02.2025
