Here are some highlights from this year’s budget speech, presented by Enoch Godongwana, Minister of Finance, on Wednesday, the 12th March 2025.
#As projected in the 2024 Medium Term Budget Policy Statement (MTBPS), a budget primary surplus of 0.5 per cent of GDP will be achieved in 2024/25, and this will grow to 0.9 per cent in 2025/26.
Government debt will stabilise, at 76.2 per cent of GDP in 2025/26, while the consolidated budget deficit also narrows, to 3.5 per cent by 2027/28.
#Debt-service costs will amount to R389.6 billion in the current financial year.
#The last R70 billion debt takeover will now be replaced with R40 billion in 2025/26, and R10 billion in 2028/29. This will result in a saving for the government of about R20 billion.
#Public infrastructure spending over the next three years will amount to more than R1 trillion.
The spending will focus on three sectors: About R402 billion for transport and logistics, R219.2 billion for energy infrastructure, and R156.3 billion for water and sanitation.
#The South African National Roads Agency (SANRAL) will spend R100 billion over the medium term to keep the national road network in good condition.
#A credit guarantee vehicle to mobilize private sector capital by derisking projects, will be launched in 2026. Its initial focus will be on independent transmission aimed at bridging the energy transmission deficit. Once the vehicle has demonstrated its efficacy, it will be broadened to include other sectors.
#To raise the revenue needed, the government proposes to increase the VAT rate by half- apercentage point in 2025/26, and by another half-a-percentage point in the following year.
This will bring the VAT rate to 16 per cent in 2026/27.
Government also proposes no inflationary adjustments to personal income tax brackets, rebates and medical tax credits.
These measures will raise R28 billion in additional revenue in 2025/26 and R14.5 billion in 2026/27.
#Tax measures announced in the current Budget will contribute largely to providing R232.6 billion in additional funding to key programmes over the medium term.
This amounts to R102 billion in 2025/26, R68 billion in 2026/27, and R62 billion in 2027/28.
# Consolidated spending, which excludes interest payments, increases from R2.4
trillion in 2024/25 to R2.83 trillion in 2027/28.
Provinces will receive R2.4 trillion over the MTEF period. This budget includes additional allocations to support critical provincial functions related to health and education.
#The local government equitable share will increase from R99.5 billion in 2024/25 to R115.7 billion in 2027/28. This is to fund increases in the cost of bulk water and electricity costs provided for free to needy households.
In 2025/26, 83 per cent of the local government equitable share provides a free basic services package of R610 per month to 11.2 million poor households.
#An amount of R11 billion is provisionally allocated over the next two fiscal years for the early retirement initiative, whose intention is to attract younger employees into the public service.
Preliminary savings are expected to average R7.1 billion per year over the medium-to-long term. The savings will be retained by departments.
#R19.1 billion is added over the medium term to keep approximately 11 000 teachers in classrooms.
An additional R10 billion over the medium term is allocated to increase the subsidy to R24 per day per child. The extra funding will also support increased access to ECD for approximately 700 000 more children, up to the age of four years old.
#Health spending will grow from R277 billion in 2024/25 to R329 billion in 2027/28 to support the equitable provision of public health services, including free primary healthcare.
An additional R28.9 billion, is added to the health budget, to keep about 9 300 healthcare workers in hospitals and clinics.
#Social grants are allocated R284.7 billion in 2025/26. This increases old age and disability grants by R130 to R2 315 in April.
The Child Support Grant by R30 to R560 per month.
The foster care grant by R70.
The COVID19 Social Relief of Distress (SRD), in its current form, will be extended by a year to end March 2026. R35.2 billion is allocated for this purpose.
#R9.4 billion is allocated to fund the defence force and correctional services.
#The Budget allocates R1.7 billion to respond to future disasters over the medium term, while R4 billion is provisionally allocated to address backlogs in recovery efforts for provinces and
municipalities.