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GNU in crisis: Rand takes hit amid tensions between DA, ANC

Bloomberg
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Global growth concerns have shot back onto the radar of financial markets as weakening US economic data and growing trade tensions hurt consumer confidence and business activity. (KanawatTH/ Getty Images)
Global growth concerns have shot back onto the radar of financial markets as weakening US economic data and growing trade tensions hurt consumer confidence and business activity. (KanawatTH/ Getty Images)

The Democratic Alliance criticised the ANC's reluctance to share control of economic policy, escalating an impasse over the budget that’s strained relations between the two biggest parties in the nation’s coalition government.

The Democratic Alliance criticised the African National Congress's reluctance to share control of economic policy, escalating an impasse over the budget that's strained relations between the two biggest parties in the nation's coalition government.

The ANC on Friday balked at a proposal by the DA to share management of economic policy, News24 reported.

READ | Budget: ANC rejects DA proposal with end of GNU now a possibility

The rejection of that plan risks leading to the collapse of the so-called government of national unity, News24 said, citing an unidentified DA negotiator.

The rand fell as much as 1% against the US currency, and traded at R18.41 per dollar by late afternoon.

The DA entered a coalition with the ANC to "grow the economy and create jobs," DA leader John Steenhuisen said by text message when Bloomberg News sought comment. "If we are unable to do so and the ANC want to lock us out of key decisions we have no way to influence economic policy," he said.

ANC spokeswoman Mahlengi Bhengu-Motsiri was not immediately available when Bloomberg reached out seeking comment.

Tension between the ANC and the DA flared last month over a budget proposal to raise value-added tax by two percentage points. Objections to that plan by the DA and others, including within the ANC, led Finance Minister Enoch Godongwana to propose increasing VAT by single percentage point by mid-2026, though he's yet to secure lawmaker support for the revenue-raising measure.

Strains between the two parties have been brewing for a while. The DA previously objected strongly to legislation to achieve universal health insurance, which it says its unconstitutional and won't work, as well as amendments to the education law that it fears will hurt Afrikaans-language schools.

Local media including the Johannesburg-based Business Day have speculated that the ANC may seek to bring the leftist Economic Freedom Fighters into the coalition government to secure passage of the budget.

"If they want to do a deal with the EFF then they must reap the consequences both for governance and the economy," Steenhuisen said.

The first of a series of budget bills is scheduled to be presented to parliament next week, when lawmakers will begin debating its fiscal framework.

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