SA’s political economy erupts: The politics of Fiscal Framework 2025 rattle the Government of National Unity, and President Trump piles on tariffs and turmoil

SOUTH AFRICA - Report 04 Apr 2025 by Iraj Abedian

April 3, 2025 may turn out to be a memorable day in SA’s annual calendar in 2025. On the one hand, the domestic tensions within the Government of National Unity (GNU) erupted into the open. This has been building since February 19, when the scheduled Budget Speech 2025 had to be postponed due to serious disagreements between the two top parties within the GNU, namely the African National Congress (ANC) and the Democratic Alliance (DA). On the face of it, the disagreements centered around the use of value-added tax (VAT) to raise sufficient revenue in the coming year to meet the projected shortfall. The root causes of the fiscal disagreement were, however, much wider than simple financial and fiscal instruments of fiscal strategy.

To complicate the fiscal stresses, the foreign policy choices made by the SA government over the past few years have put the SA position at odds with the US government since the early days of the Biden Administration. Against that background, when President Trump declared war on the global trade regime on April 3, he put a heavy 30% tariff on most SA exports to the US market.

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