Speaking from Parliament on Wednesday , Enoch Godongwana, the Minister of Finance, said the proposed VAT rate in 2025/26 and 2026/27 was dropped.
March tax revenue projections were also revised down by R61.9 billion over the next three years, so will the R5 billion proposed allocation to the Department of Defence for its participation in the SADC mission.
Godongwana said this is a reflection of the difficult trade-offs needed to balance fiscal sustainability while addressing developmental goals.
The International Monetary Fund now projects global growth at 2.8 per cent in 2025, half a percentage lower than the January estimate.
Similarly, global trade is projected at 1.7 per cent in 2025, which is also much lower than the January estimate.
A breakdown of sector allocations is as follows:
The provincial education sector baseline over the 2025 MTEF is R1.04 trillion, and R9.5 billion will be added over the medium term to keep teachers in classrooms and hire more staff.
An additional R10 billion was added to expand access to early education.
This is expected toincrease the ECD subsidy from R17 per child per day to R24.
The extra funding will also support increased access to ECD for 700,000 more children, up to the age of five years.
The provincial health sector budget is R845 billion over the medium term.
This budget will be increased by R20.8 billion over three years to employ 800 post-community service doctors and essential goods and services and reduction of accruals.
From April 2025, the old age grant increased by R120 to R2,310 and is set to increase by an additional R10 to R2,320 in October, as originally announced in March.
The COVID-19 social relief of distress will be extended to the end of March 2026.
But the allocation for 2025/26 has been increased from R1.8 billion to R3 billion.
R1.4 billion is allocated to support the preparations for the upcoming local elections.
R885 million of the allocation is for the Independent Electoral Commission and R550 million for the South African Police Service and the South African National Defence Force to maintain public order.
Municipalities will receive R552.7 billion over the same period.
Of the R402 billion for transport and logistics, R93.1 billion is for the South African National Roads Agency (SANRAL) to keep the 24,000-kilometer national road network in active maintenance and rehabilitation.
R53.1 billion is for the maintenance and refurbishment of provincial roads.
About R7.5 billion over the MTEF, goes to the South African Revenue Service (SARS) in collecting more revenue.
The water and sanitation sector will spend R156.3 billion on expanding water resource and service infrastructure including dams, bulk infrastructure to service mines, factories and farms.
Godongwana also said new trade barriers may raise inflation and prolong the cycle of higher interest rates.
By 2027/28, the primary surplus will grow from an estimated 0.8 per cent of GDP in this financial year to 2.1 per cent.
From the 4th of June 2025, the general fuel levy will increase by 16 cents per litre for petrol, and by 15 cents per litre for diesel.