Clarity on Western Cape Budget Process

Premier Alan Winde chaired a special Premier’s Coordinating Forum (PCF) on Wednesday, 14 May 2025, to provide clarity to the province’s municipalities on how the failure to pass the national budget on two occasions has impacted the Western Cape Government’s budgetary process.

The PCF is an intergovernmental consultative forum aimed at strengthening partnerships between the Western Cape Government and local governments.

National Finance Minister, Enoch Godongwana, will re-table the 2025 national budget on 21 May 2025. This after the move to increase Value Added Tax (VAT) was broadly rejected, prompting Minister Godongwana to withdraw the previous budget.

This has had broader fiscal implications for all provinces.

At the PCF, Head of the Provincial Treasury, Julinda Gantana, explained to Mayors and Municipal Managers the process going forward.

Section 29 of the Public Finance Management Act (PFMA) makes provision for continued government expenditure amid the current circumstances. As per Section 29(2)(b) of the PFMA, national and provincial governments will spend in terms of their 2024 national and provincial budgets.

“We find ourselves in uncharted territory, with many of our residents anxious about the current situation. There is no reason to be alarmed, though. Our approach to the province’s budget and expenditure has always been transparent and credible,” said Premier Winde during the meeting.

He added, “Municipalities are at the coalface of service delivery and through the PCF, we felt it necessary to provide clarity on the budgetary process to reassure local governments that our spending priorities are on track and align with the Provincial Strategic Plan (PSP) 2025-30.”

Ms Gantana outlined the Western Cape Government’s approach to the provincial budget: For the first four months of the new 2025 financial year, which started on 1 April, the provincial government can spend up to 45% of the province’s total amount appropriated in the 2024 budget. Following this, for each of the following months, the province is permitted to spend up to 10% of the total amount appropriated in the previous annual budget.

The Western Cape Government budget policy is based on the following principles, which have been approved by the provincial Cabinet:

• Allocative efficiency – which is aligned with PSP.
• Productive efficiency – which is credible and impactful.
• Fiscal sustainability – to protect long-term service delivery resilience.

In keeping with these principles, the provincial government will be able to meet its fiscal commitments, and transfers to municipalities will continue under the current circumstances.

The next steps are:

• Provincial Treasury will issue a circular by 21 May 2025.
• Municipal allocations letters will be issued by 26 May 2025.
• Municipalities must table their budgets by 31 May 2025.
• The provincial budget will be tabled in the first week of June 2025.
• Municipal budgets must be adopted by the end of June 2025.

The Premier thanked the Provincial Treasury team for their hard work in maintaining fiscal credibility and sustainability throughout the national budget impasse. “Our work will continue. We will not allow these kinds of challenges to derail our efforts to grow the province’s economy so as to keep creating more jobs. This is evidenced in the latest promising jobs numbers, released this week, which show that our economic policies and spending priorities are working for our residents.”