On Wednesday, 12 March 2025, Minister of Finance Enoch Godongwana delivered the much-anticipated 2025 Budget Speech, outlining key fiscal policies and economic strategies for the country.
The speech addressed various financial and economic issues, focusing on taxation, social protection, public services, and infrastructure investments. Here’s a recap on the highlights you might have missed.
Revenue and Tax Proposals
The government has announced a VAT increase from 15% to 16% by 2026/27, which will affect consumer prices across various sectors. Additionally, there will be no inflationary adjustments to personal income tax brackets, meaning that taxpayers may pay higher effective taxes as earnings increase. However, there is some relief as the fuel levy remains unchanged, saving consumers approximately R4 billion.
Social Protection and Household Support
To ease the financial strain on vulnerable households, the government has expanded VAT zero-rated food items to make essential goods more affordable. Social grants have also been increased, benefiting pensioners, children, and foster care recipients. Furthermore, the COVID-19 Social Relief of Distress (SRD) grant has been extended until March 2026, providing continued support for those in need.
Public Sector Wage Bill and Workforce Management
A three-year wage agreement has been reached, ensuring stability in the public sector but also affecting government spending. To manage workforce costs, the government has introduced an early retirement initiative, creating opportunities for younger employees while reducing long-term financial burdens.
Education and Early Childhood Development (ECD)
The government has allocated R19.1 billion to retain 11,000 teachers, ensuring better learning conditions. Additionally, the ECD subsidy has increased, supporting 700,000 more children by raising per-child funding from R17 to R24 per day.
Healthcare and Public Health
To strengthen healthcare services, the budget has allocated R28.9 billion to retain 9,300 healthcare workers and hire more doctors. The overall health budget will grow to R329 billion by 2027/28, improving access to essential medical services and medications.
Infrastructure Investment
With over R1 trillion allocated to infrastructure over three years, key projects in transport, energy, and water will boost business opportunities and improve public service delivery. Investments in road networks, rail systems, and water security are expected to enhance economic productivity and create jobs.
Public-Private Partnerships (PPP) and Alternative Financing
New PPP regulations, effective June 2025, will simplify investment procedures and encourage private sector participation in government projects. Additionally, infrastructure bonds and credit guarantee vehicles will help fund major developments, offering new opportunities for businesses.
Local Government and Municipal Strengthening
Municipalities will receive an increased equitable share to improve basic services such as water, sanitation, and electricity. These improvements will enhance living conditions for residents and create a more business-friendly environment.
Fighting Corruption and Economic Crimes
To promote a fair and transparent business environment, the government has strengthened its financial forensic and law enforcement capabilities. These measures aim to combat money laundering and economic crimes, ensuring a more stable and trustworthy economic system.
Macroeconomic Stability
The government remains committed to achieving a primary budget surplus and stabilizing debt at 76.2% of GDP. These fiscal measures aim to create a stable economic environment, which will benefit both businesses and individuals by ensuring long-term financial sustainability.
The 2025 Budget Speech outlines significant financial policies and reforms that will affect individuals, businesses, and the overall economic landscape. As South Africa navigates fiscal challenges, these measures aim to balance economic growth, social protection, and infrastructure development.