Tensions escalate in South Africa's coalition government as the ANC and DA clash over VAT hikes and spending cuts, risking political fallout and economic instability.

The country's coalition government is in jeopardy as a pivotal vote on the national budget revealed the stark differences between South Africa's two largest parties, the Democratic Alliance (DA) and the African National Congress (ANC).

The center-right DA voted against the fiscal framework, a key part of the budget, after opposing a VAT increase and demanding spending cuts in all government institutions. Since the ANC is a center-left party, it rejected the DA's "austerity budget" demand.

With the help of other smaller parties, both inside and outside the government, it was able to pass the fiscal framework through parliament by a vote of 194 to 182, demonstrating its political savvy.

The DA challenged the vote in court, claiming it was "procedurally flawed." Its top leadership will meet later to determine whether to stay in what South Africans refer to as a government of national unity (GNU).

The ANC lost its parliamentary majority in elections for the first time since Nelson Mandela brought it to power in 1994 at the end of white-minority rule, and the coalition government was established less than a year ago.

Business leaders in South Africa urged the two parties to form a coalition because they believed it would be the most effective way to ensure economic stability.

In a crucial attempt to keep Ramaphosa's party out of power, the Inkatha Freedom Party (IFP) voted for the ANC, ending the alliance it had made with the DA in the run-up to the election.