South Africa's 2025 Budget Speech: Key Highlights

The 2025 Budget Speech, delivered by Finance Minister Enoch Godongwana, outlines South Africa’s economic priorities, tax adjustments, and spending plans. Here’s a breakdown of the key takeaways:

Economic Outlook

  • Slow Growth: GDP grew by only 0.6% in 2024, with an expected average growth of 1.8% over the medium term.

  • Debt Stabilization: Government aims to stabilize debt at 76.2% of GDP by 2025/26 while reducing the budget deficit to 3.5% by 2027/28.

  • Debt-Service Costs: R389.6 billion allocated, which is 22% of total revenue – more than spending on health, policing, and education.

Fiscal Strategy & Structural Reforms

The government remains committed to fiscal stability, economic reforms, and infrastructure development. Four key focus areas:

  1. Macroeconomic Stability: Ensuring sound financial management.

  2. Structural Reforms: Improving electricity, water, and logistics sectors.

  3. State Capability: Enhancing governance and efficiency.

  4. Infrastructure Investment: Expanding transport, energy, and water projects.

Successes from Operation Vulindlela:

  • 22,500 MW energy projects in the pipeline.

  • 51% decrease in mobile data costs, improving digital access.

  • Cleared water-use license backlog, unlocking stalled investments.

  • Expansion of e-Visas to 34 countries to boost tourism.

Infrastructure Investments

Over the next three years, the government will allocate more than R1 trillion towards infrastructure:

  • R402 billion – Transport & logistics

  • R219.2 billion – Energy

  • R156.3 billion – Water & sanitation

New Public-Private Partnership (PPP) regulations (effective 1 June 2025) will simplify private sector participation in infrastructure development.

Tax & Revenue Measures

To address rising spending pressures, the government has introduced tax changes:

  • VAT Increase: Rising by 0.5% in 2025/26 and another 0.5% in 2026/27, reaching 16%. The increase has been noted in the budget but is not confirmed yet. VAT zero-rated food items—currently comprising 21 products—will be expanded to help lessen the impact of these rate hikes on lower-income households.

  • No Inflationary Adjustments: Personal income tax brackets, rebates, and medical tax credits remain unchanged.

  • Fuel Levy Freeze: No increase for another year, saving consumers R4 billion.

Social & Public Services Spending

Healthcare

  • R28.9 billion allocated to retain 9,300 healthcare workers and employ 800 post-community service doctors.

  • Funding set aside to prevent medicine shortages.

Education

  • R19.1 billion to keep 11,000 teachers in classrooms.

  • ECD (Early Childhood Development) subsidy increase from R17 to R24 per child per day, expanding access for 700,000 children.

Social Grants

  • Old Age & Disability Grant increased by R130 to R2,315.

  • Child Support Grant raised by R30 to R560.

  • SRD (temporary Social Relief of Distress) Grant extended until March 2026 (R35.2 billion allocated).

Security & Defense

  • R9.4 billion allocated for SADC peacekeeping missions and modernizing the defense force.

  • Increased funding for law enforcement to tackle financial crimes and corruption.

Public Finance & Governance Reforms

  • Audit of ghost workers to eliminate wasteful expenditure.

  • Municipal performance-based funding to improve service delivery.

  • R3.5 billion allocated to SARS to enhance tax compliance and enforcement.

Conclusion

The 2025 budget prioritizes economic recovery, infrastructure development, and social support, while balancing tax increases with measures to protect vulnerable households. With a focus on long-term growth and fiscal responsibility, the government aims to create a more sustainable and inclusive economy.

For more insights, visit National Treasury’s official website.