Finance Minister Enoch Godongwana tabled the national budget on Wednesday, confirming the government has dropped its controversial VAT increase, instead opting for tighter spending and modest revenue adjustments to stabilise the economy and maintain essential services.
The budget, described as “redistributive, not austere,” allocates 61% of non-interest spending to the social wage, supporting health, education, housing, and social grants.
Despite economic pressures, the minister confirmed increased investment in infrastructure and social support, while warning of persistent fiscal constraints.
Key Budget Highlights:
Revenue Measures:
No VAT increase: The proposed hike was scrapped after public opposition.
Fuel levy increases:
- Petrol: +16 cents per litre
- Diesel: +15 cents per litre (from 4 June)
Tax revenue projection down by R61.9 billion over three years.
No major new taxes, but the 2026 Budget may include measures to raise R20 billion.
R7.5 billion allocated to SARS to improve revenue collection and fight illicit trade.
SARS aims to collect up to R50 billion/year from improved enforcement.
The increases in the so-called “sin taxes” – excise duties on liquor and tobacco – and the personal income tax tables are unchanged from March’s budget.
Spending Priorities
Total non-interest spending over the next 3 years: R6.69 trillion
Health:
- R20.8 billion added to hire 800 post-community service doctors and ease supply shortages.
- Total sector budget: R845 billion
Education:
- R9.5 billion added to retain teachers and hire staff.
- R10 billion kept for early childhood development (ECD), raising the subsidy from R17 to R24/day.
Social grants:
- Old age grant: Increased by R120 to R2,310/month in April, rising to R2,320 in October.
- COVID-19 relief grant extended to March 2026.
Election readiness:
- R1.4 billion allocated for 2026 local elections.
Defence:
- Reduced DRC deployment spend from R5 billion.
- R3 billion allocated to support troop withdrawal.
Infrastructure Investment (Over R1 trillion over 3 years)
Transport & logistics:
- SANRAL: R93.1 billion
- PRASA: R66.3 billion (includes rolling stock and signalling)
Energy:
- R219.2 billion for generation, transmission, and renewables.
Water & sanitation:
- R156.3 billion for dams, bulk infrastructure, and rural supply.
Additional Budget Measures
Debt service costs:
- Over R1.3 trillion in 3 years—more than health, education, and policing combined.
Deficit narrowed:
- Debt to GDP stabilised at 77.4%, despite lower growth.
Real GDP growth revised down to 1.4% for 2025, with moderate improvement expected.
Healthcare & service crisis: Budget highlights dire need for investment in frontline services, referencing emotional testimony from a UCT medical student.
Local government:
- Provinces: R2.4 trillion
- Municipalities: R552.7 billion
- Focus on free basic services for 11.2 million poor households.
What’s Still Under Pressure
The following are recognised but currently unfunded due to budget limits:
- Potential loss of PEPFAR/USAID HIV funding
- PRASA and infrastructure backlogs
- Population-driven changes in provincial allocations
- Additional funding for the judiciary, Stats SA, and political parties
- Possible Transnet guarantee to help refinance debt
Conclusion
Minister Godongwana emphasised the budget’s balancing act between supporting economic growth and maintaining fiscal discipline.
He called on all South Africans to pay their taxes and urged the government to match that responsibility with transparency and efficient spending.
“Our journey toward national prosperity belongs to every South African,” the Minister said.
READ: Budget 2025 in Full
