On 12 March 2025 at 2pm, Finance Minister Enoch Godongwana delivered the revised 2025 Budget Speech, outlining a comprehensive strategy to steer South Africa through a period of economic stagnation and fiscal challenges. The speech, which follows a three-week delay that spurred vigorous public debate, set forth a vision that balances fiscal discipline with bold investments in infrastructure, social services, and structural reforms.

Austerity and Fiscal Discipline in a Sluggish Economy

Despite an underwhelming economic growth of just 0.6% in 2024 and medium-term projections of only 1.8%, the government is determined to stabilize the macroeconomic environment. Key fiscal targets include achieving a primary surplus of 0.5% of GDP in 2024/25, rising to 0.9% in 2025/26, and maintaining government debt at 76.2% of GDP by 2025/26. With current debt-service costs at R389.6 billion—equating to 22 cents on every rand raised—the revised debt relief package for Eskom and other fiscal measures aim to reduce these burdens and safeguard critical public spending.

Investing in Infrastructure to Drive Economic Renewal

A cornerstone of the budget is a sweeping commitment to infrastructure investment. Over the next three years, more than R1 trillion will be allocated to:

• Transport and Logistics: R402 billion, including significant spending by SANRAL and PRASA to improve national roads and commuter rail services.
• Energy Infrastructure: R219.2 billion, supporting a pipeline of energy projects to reduce power cuts.
• Water and Sanitation: R156.3 billion, earmarked for large-scale dam projects and water system upgrades.

These investments, bolstered by new public-private partnership regulations and reconfigured financing mechanisms, are designed to dismantle supply-side constraints, foster job creation, and stimulate broader economic growth.

Revenue Enhancements and Tax Adjustments

To fund these ambitious initiatives, the government will incrementally raise the VAT rate—by half a percentage point in 2025/26 and again in 2026/27, reaching 16% by 2026/27. This move is expected to generate R28 billion in additional revenue in the coming fiscal year, while avoiding changes to personal income tax brackets and maintaining a stable fuel levy to ease the pressure on households.

Strengthening Social Spending and Public Services

Recognizing the pressing social needs, the budget provides increased funding for:

• Education: An additional R19.1 billion to retain approximately 11,000 teachers and address chronic underinvestment in school infrastructure.
• Early Childhood Development: A medium-term boost of R10 billion to raise the subsidy per child, expanding access for an additional 700,000 children.
• Healthcare: An allocation increase from R277 billion to R329 billion by 2027/28, including R28.9 billion to sustain critical healthcare staffing.
• Social Grants and Security: Enhanced grants for the elderly, disabled, and children, along with extended COVID-19 relief measures and increased funding for defence and correctional services.

Reforming Public Expenditure and Enhancing State Capability

Beyond the numbers, the speech emphasized the need to reform public expenditure. Over the past decade, 240 spending reviews have revealed inefficiencies and misalignments in budget allocations. In response, the government is committed to:

• Auditing ghost workers and rationalizing public employment programs.
• Reviewing conditional grants to eliminate duplication.
• Overhauling the budget process to ensure public funds are directed efficiently toward national priorities.

Looking Ahead

In his concluding remarks, Minister Godongwana stressed that the revised budget represents a series of tough but necessary decisions—choices that prioritize long-term stability, economic growth, and improved public services for all South Africans. He called on government officials, taxpayers, and all stakeholders to embrace these measures, which he believes will help secure a more prosperous and equitable future for the nation.

As South Africa embarks on this challenging journey, the revised 2025 Budget Speech sets a determined tone for overcoming economic hurdles while laying the groundwork for transformative investments in the country’s future.

Read Full Speech here: Budget Speech 2025 – Final