| For South Africa’s finance minister, this week’s budget was supposed to be business as usual. Tough choices are always part of the process and disagreements among decision-makers are expected. In the past, the line was generally held and proposals flowed through the system. Wednesday’s unprecedented delay to the biggest event on the nation’s financial calendar was a tough lesson for the African National Congress that times have changed. It no longer has the muscle to style the landscape itself. The party failed to win an outright majority in last year’s election for the first time since 1994 — forcing it to bring in previous opponents to help it govern.  Enoch Godongwana. Photographer: Dwayne Senior/Bloomberg Two weeks ago, Finance Minister Enoch Godongwana presented the key highlights of his upcoming budget to cabinet colleagues. He left out a crucial detail to avoid market-sensitive information from leaking. While he had flagged an intention to adjust consumption taxes, the bombshell omission that he planned to raise value-added tax two percentage points to 17% was left for the final morning — and it was too much for the ANC’s coalition partners to accept. The first VAT increase in seven years and only the second since it came to power in 1994 was also unpalatable for many in the leading party itself, adding weight to the backlash within the executive. The minister later refuted claims from smaller parties in his government that he hadn’t consulted them. Yet, the fact he believed the Treasury could push through an unpopular decision without first securing broad consensus is a mystery. That aside, a walkback on Godongwana’s revenue-raising plan would be a serious blow to efforts to rein in debt that he’s long argued has reached unsustainable levels. While South African consumers, households and businesses have borne the cost of escalating tax rates for more than a decade, there’s little debate that more revenue is needed.  A customer pays at a supermarket in Johannesburg. Photographer: Leon Sadiki/Bloomberg What’s even clearer, though, are the deep divisions within the 10-party ruling alliance, whose members have previously clashed over education policy, the introduction of a national health-insurance program and the passing of a new land-expropriation law that drew the ire of US President Donald Trump. Godongwana plans to present a revised budget on March 12. The next few weeks will show if South Africa’s political parties are ready to govern together. — Mike Cohen While the proposed budget contained bad news for consumers, there were some winners in the shelved plans. Click here for highlights of the budget review. The withdrawn document shows the Treasury aimed to raise an additional 191 billion rand ($10.3 billion) over three fiscal years, which would have helped it rein in debt and fund new infrastructure. It envisioned debt stabilizing in the next fiscal year and that the budget deficit would fall to 3.4% in fiscal 2028 from 5% currently. The economy was expected to grow by an average of 1.8% over the next three years. The government has drafted an early-retirement offer for civil servants, part of an effort to reduce its wage bill. State workers aged between 55 and 60 could be offered two weeks’ pay for every year they’ve worked up to a maximum of two decades, and one week’s pay for every year employed after that, sources say. Any penalties usually incurred by those taking early retirement will be waived. The Democratic Alliance on Wednesday defended its decision to obstruct a surprise plan to hike VAT, with John Steenhuisen saying it would have “broken the back of our economy.” “We will now fight with the same vigor to introduce a new budget that is anchored in growing the economy, rather than increasing taxes or debt,” the party’s leader (who is also the minister of agriculture) said. The DA is the second-biggest party in the unity government.  Steenhuisen at a briefing in Cape Town on Wednesday. Photographer: Phill Magakoe/AFP/Getty Images South Africa must take bold steps to ease a suffocating debt burden and boost economic growth, said the International Monetary Fund. “What we are recommending is a fiscal adjustment of 1% of gross domestic product per year for three years,” Tidiane Kinda, the IMF’s resident representative to South Africa, said in an interview at Bloomberg’s Johannesburg offices on Monday. Steps it could take to achieve this include wage discipline, accelerating reforms at struggling state-owned enterprises and tighter control of government procurement, the lender said.  The Johannesburg skyline. Photographer: Waldo Swiegers/Bloomberg | 
