EXPLAINER: How the budget goes from being tabled to approved
Members from the National Assembly and the National Council of Provinces will for the next several weeks engage in robust discussions over the budget, which includes a 0.5% percentage point value-added tax (VAT) increase.
Finance Minister Enoch Godongwana delivered the national budget for 2025 - weeks after it was postponed due to disagreements within the Government of National Unity (GNU). Picture credit: Phando Jikelo/Parliament
CAPE TOWN - Members from the National Assembly and the National Council of Provinces will for the next several weeks engage in robust discussions over the budget, which includes a 0.5% percentage point value-added tax (VAT) increase.
Members of Parliament (MPs) have about three months to debate and pass the budget and its accompanying bills, but their first hurdle is just 16 days after last week’s budget.
Members from the National Assembly and the National Council of Provinces will for the next several weeks engage in robust discussions over the budget, which includes a 0.5% percentage point value-added tax (VAT) increase.
The VAT increase will take effect from 1 May regardless of whether parties in Parliament decide to change the budget to exclude any VAT increases following deliberations.
But as the first order of business, MPs must adopt the Fiscal Framework and Revenue Proposals within 16 days after the budget is tabled, which is at the beginning of April.
The Fiscal Framework and Revenue Proposals Establish economic policy and revenue projections. They also set the overall limits for government spending.
The other money bills (Division of Revenue and Appropriation Bills) have to follow a sequenced process to make sure they’re finalised before the new financial year takes full effect.
But Parliament said "some flexibility exists" if delays occur.
Spokesperson, Moloto Mothapo, said the budget process was a "structured cycle" where government revenue and spending were planned, debated, and approved by Parliament.
He said the budget was not set in stone when it was tabled by the finance minister.
"While the minister of finance presents the annual budget, it is not a final decision but rather a proposal that undergoes extensive scrutiny, debate, and possible amendment before it is approved," said Mothapo.
FORMULATION STAGE
The budget process occurs in different key stages, with the first stage being the drafting and planning stage. It’s during this stage where the National Treasury issues spending guidelines and government departments submit their draft budgets based on these guidelines.
Parliament also forms a key part of the process by providing oversight through its committees and budget review reports.
APPROVAL STAGE
The main feature during this stage is when the minister of finance tables the budget in February during a sitting of the National Assembly. MPs from all parties will then get an opportunity to scrutinise and debate the budget. Public consultations will also take place before the budget bills are passed.
IMPLEMENTATION
Once the budget is debated and approved, the budget is implemented, and government departments can use the funds for programmes and services. Parliament monitors this spending through its various oversight committees.
WHAT HAPPENS IF THERE ARE DELAYS?
If Parliament has not passed the budget by 1 April, the Public Finance Management Act (PFMA) allows government spending to continue based on the previous year's budget allocations.
Parliament says the Fiscal Framework should ideally be passed before 1 April, but government can continue spending as prescribed by the PFMA while awaiting final approval.
But some votes, such as the Division of Revenue Bill, can happen in May, even if other aspects of the budget are still being finalised.