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Wednesday, March 19, 2025

Explainer: Budget delayed, what now?

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The budget process in South Africa is a critical function of Parliament, ensuring that government spending aligns with national priorities while maintaining accountability and transparency.

 

Finance Minister Enoch Godongwana may have tabled the budget, but there is still a way to go before it is approved, due to parties in the Government of National Unity disagreeing over its contents.

 

ALSO READ: Budget 2025: VAT increases proposed as the DA says it will not support it

 

Here is a detailed look at how the budget process works, its various stages, and the roles of Parliament and the public in shaping it.

 

What is the Budget Process in Parliament?

 

The budget process is a structured cycle where government revenue and expenditure are planned, debated, and approved by Parliament.

 

Although the Minister of Finance presents the annual budget, it is not a final decision but a proposal subject to thorough scrutiny, debate, and possible amendments before approval.

 

Rather than being a single document, the budget comprises multiple interrelated budget instruments that undergo parliamentary and public processes before becoming law.

 

Key Stages of the Budget Process

 

1. Drafting & Planning (Formulation Stage)

 

  • The National Treasury issues spending guidelines.
  • Government departments submit draft budgets based on these guidelines.
  • Parliament provides oversight through committees and budget review reports.

 

2. Legislative Process (Approval Stage)

 

  • The Minister of Finance presents the budget in February. In this case it was delayed to 12 March
  • Parliament examines and debates the budget.
  • Public consultations occur before the budget bills are passed.

 

3. Implementation

 

  • Once approved, the budget is implemented.
  • Government departments allocate funds for programs and services.
  • Parliament monitors spending through oversight committees.

 

4. Auditing & Assessment

 

  • The Auditor-General reviews government spending.
  • Parliament holds departments accountable for financial performance.
  • Reports are published, and corrective actions are taken where necessary.

 

Parliamentary Voting on the Budget

 

MPs do not vote on the budget as a single document but on various budget-related bills in a structured sequence:

 

  1. Fiscal Framework and Revenue Proposals

 

  • Establishes economic policy and revenue projections.
  • Sets the overall limits for government spending.

 

2. Division of Revenue Bill

 

  • Determines how funds are shared between national, provincial, and local governments.

 

3. Appropriation Bill

 

  • Allocates money to specific government departments and programs.

 

Each bill and instrument must be approved before proceeding to the next stage.

 

What Happens if the Budget is Not Passed by April 1?

 

If Parliament fails to pass the budget by April 1, the Public Finance Management Act (PFMA) allows continued government spending based on the previous year’s budget allocations. However:

 

  • The Fiscal Framework should ideally be passed before April 1.
  • The government can continue spending under PFMA provisions while awaiting final approval.

 

Timeframe for Budget Approval

 

The Money Bills Amendment Procedure and Related Matters Act sets specific deadlines:

 

  • The Fiscal Framework and Revenue Proposals must be adopted within 16 days after the budget is tabled.
  • Other bills and instruments follow a sequenced approval process to ensure completion before the financial year fully takes effect.
  • Some flexibility exists to accommodate delays.

 

Government Spending Before Budget Approval

 

When Can the Government Spend Without a New Budget?

 

The PFMA allows the executive to temporarily spend up to 45% of the previous year’s budget until Parliament approves the new one. This ensures continuity in essential government services.

 

Can MPs Vote on Departmental Budgets in May if the Budget Framework is Not Yet Approved?

 

Yes. Some votes, like the Division of Revenue Bill, can take place in May, even if other parts of the budget are still being finalized. Voting follows strict legal procedures:

 

  • Fiscal Framework and Revenue Proposals: One-third of MPs must be present, and a majority of those present must approve.
  • Division of Revenue and Appropriation Bills: At least 201 MPs must be present, with a majority vote required for approval.

 

Can the Government Start Spending a New Budget Without Parliamentary Approval?

 

No. Until the budget is approved, government spending follows the previous year’s allocations. New budgetary allocations cannot be implemented without Parliament’s approval.

 

Legislative Considerations and Amendments

 

When Do MPs Vote on the Fiscal Framework?

 

MPs must adopt the Fiscal Framework within 16 days of its tabling. However, legal flexibility allows adjustments if delays occur.

 

Can Parliament Change the Budget?

 

Yes. Parliament has the power to amend the budget, but any changes must:

 

  • Comply with the Money Bills Amendment Procedure and Related Matters Act.
  • Consider government priorities, economic stability, and spending limits.
  • Use Budgetary Review and Recommendation Reports (BRRRs) to propose amendments.

 

If the Budget is Rejected After April 1, Must the Executive Repay Spent Money?

 

No. If the budget is delayed:

 

  • The government continues spending under legal provisions, similar to an overdraft, until final approval.
  • No direct “repayment” occurs, but adjustments may be made to align spending with the final budget.

 

Impact of Budget Delays on VAT and Taxation

 

Any changes to VAT or taxation do not require direct repayment. Instead, tax adjustments follow the Taxation Laws Amendment Bills, guiding revenue collection. Once approved, new tax rates or adjustments apply prospectively.

 

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