South Africa's Budget Balancing Act: Rising VAT to Fund Health and Defense

South African lawmakers have outlined plans that include a 0.5% VAT increase to fund additional health and defense spending. The rise in VAT aims to address cuts in US aid, return 9,300 jobs in healthcare, and support 5 billion rand to reinforce military forces amid Congo's conflict.

South Africa's Parliament has unveiled plans to bolster budgets for health and defense while increasing value-added tax (VAT) by 0.5%. This adjustment is designed to raise funds for essential sectors, particularly as the nation faces reduced foreign aid amidst fiscal challenges.

Finance Minister Enoch Godongwana has announced a supplementary 28.9 billion rand steering towards health provisions in the 2025 budget. This allocation seeks to fill voids left by the cancellation of PEPFAR by former President Donald Trump while also assisting approximately 9,300 medical staff and 800 new doctors.

Despite protests over VAT hikes, Godongwana emphasizes this measure will prevent further spending cuts and secure essential public services. Parliamentary debates on this proposal are imminent, with approval required for funds implementation. The initiative reflects South Africa's obligation toward regional stability and its ongoing struggle with economic constraints.

(With inputs from agencies.)