Finance Minister Enoch Godongwana has issued a stark warning that a court ruling in favor of the Economic Freedom Fighters’ (EFF) bid to block proposed fuel levy increases could trigger a R3.5 billion budget shortfall, jeopardizing South Africa’s fiscal stability. The threat comes as the government scrambles to address a larger R75 billion revenue gap caused by the absence of a planned VAT hike, which was abandoned due to political backlash earlier this year.
The EFF filed an urgent court application to halt the fuel levy increases, arguing that the move would disproportionately burden low-income households already reeling from inflation and unemployment. However, Godongwana emphasized that the levy hikes—set to take effect on June 4, 2025, with petrol facing a 16-cent increase per litre and diesel a 15-cent rise—are critical to fund healthcare, education, and infrastructure projects. “Without these adjustments, we risk deeper cuts to essential services or even a credit rating downgrade,” he stated.
The government’s revised 2025 Budget, re-tabled on May 21, hinges on balancing debt control with social spending amid slowing economic growth. Analysts warn that a judicial reversal of the fuel levy plan could force emergency austerity measures, including public sector wage freezes or reduced subsidies for food and housing programs.
Public reaction remains divided. While labor unions and civil society groups have criticized the levy hikes as regressive, business leaders argue that failing to address the shortfall could deter foreign investment and stall recovery efforts. “This isn’t just about filling Treasury coffers—it’s about preventing a broader economic collapse,” said a Pretoria-based economist, who requested anonymity.
As the court battle unfolds, the outcome will test the government’s ability to navigate fiscal constraints without exacerbating inequality. For now, millions of South Africans await the ruling, aware that either decision risks deepening the nation’s financial and social challenges.
