Parliamentary Research Unit Publishes 2025 Budget Bulletin
To read the full bulletin, click here.
The 2025 Budget presentation highlights South Africa’s ongoing economic challenges, including slow GDP growth (averaging 1.8% over the next three years), rising government debt (now at 76.2% of GDP), and increasing expenditure demands, particularly in infrastructure and social protection. To balance development needs with fiscal sustainability, the budget prioritizes essential services, economic reforms, and public investment while managing public debt.
Revenue generation remains under pressure due to VAT and personal income tax shortfalls, but proposed tax policy adjustments—such as a VAT increase and freezing income tax thresholds—aim to boost revenue. Significant allocations include R1 billion for infrastructure, investments in transport and energy, and continued funding for public wages and social grants. However, struggling municipalities face financial instability due to declining revenue collection and increased reliance on intergovernmental transfers, prompting calls for structural reforms and better financial oversight.
Local governments face mounting challenges, including poor revenue collection, rising indigent households, and weak financial management. A review of the Local Government Fiscal Framework seeks to refine funding models, while efforts are needed to improve political and administrative accountability, enhance cash flow management, and strengthen financial discipline. Addressing these issues requires collaboration among municipal leaders, businesses, and residents to ensure sustainable service delivery and financial stability.
