South Africa’s two biggest political parties are holding a series of talks to resolve an impasse over the national budget that poses the biggest threat yet to the stability of the country’s ruling alliance.

Negotiating teams for the African National Congress (ANC) and Democratic Alliance (DA) hope to reach a compromise before the fiscal framework for the budget is due to be presented to lawmakers at the beginning of next month.

The parties have been at loggerheads over the National Treasury’s plans to raise value-added tax (VAT), with the DA pressing for it to cut spending and adopt measures to fire up the economy instead.

A business-friendly coalition was established after last year’s elections failed to produce an outright winner, but the ANC has angered the DA and some of its smaller rivals by unilaterally pushing through new education, health-insurance and land-expropriation laws. The added tensions over the budget have increased concerns about the durability of President Cyril Ramaphosa administration and weighed on the rand, with recent opinion polls seen Bloomberg indicating a slight decline in its public support.

The DA is worried about its prospects in next year’s municipal elections and is using the budget to claw back support, according to people with knowledge of the budget talks. The party may be willing to make concessions on taxes and back the budget if some of its other demands are met — and a compromise is considered within reach, they said.

Concessions sought by the DA include getting private contractors to run the ports in Durban and Cape Town, and giving local authorities more control over parts of the rail system by the end of the year — a timeline ANC negotiators consider unreasonable, the people said. The DA also wants some expenditure re-prioritized, debt repayments to be sped up, more money to be allocated for infrastructure and low-income earners to get more tax relief.

DA leader John Steenhuisen is awaiting confirmation of a meeting with Ramaphosa to discuss a way forward, the people said.

Senior ANC members have publicly accused the DA of behaving as if it’s still in the opposition, with Finance Minister Enoch Godongwana among those criticizing its approach.

It’s untenable to have a situation “where people constitute themselves as an opposition inside government,” he said in an interview.

DA spokesperson Willie Aucamp declined to comment on the ongoing talks other than to reiterate his party’s opposition to the VAT hike, and didn’t specify whether it would consider leaving the government if it didn’t get its way.

It’s in neither the ANC’s nor the DA’s interest for their power-sharing arrangement to unravel, and both are positioning themselves ahead of next year’s election, according to Sanusha Naidu, an independent political analyst.

“If the DA walks away, are they confident enough that they will find themselves in another coalition?” she said.