Breaking Down the 2025 Budget Speech: What It Means for You and South Africa

The South African Budget Speech 2025/26, delivered by the Minister of Finance, Enoch Godongwana, outlines a financial roadmap for the country amid economic challenges and ongoing fiscal constraints. With a total consolidated government expenditure of R2.59 trillion, the budget aims to strike a balance between economic recovery, social welfare, and infrastructure development, while addressing rising debt and funding constraints. The GDP is estimated to grow at 1.4% in 2025. This projection is lower than the 1.9% projected in March. With tension rising in the global economic sphere, there is a call for urgent restructuring and inclusive job creation.

Godongwana highlights maintaining macroeconomic stability, implementing structural reforms, improving state capability and accelerating infrastructure investments as a strategy for faster growth, potentially ‘shielding’ South Africa from the increasingly uncertain global environment. 

The budget is traditionally divided into key areas, with the most significant areas being social services, economic development, security and public services. Here's a breakdown. 

Fiscal Strategy 

Fiscal policy refers to the government's spending programs and tax policies that guide the economy. In 2025/26, government debt is projected to stabilise at 77.4% of GDP. Whilst this is 1.2% higher than what was projected in March, it is credited towards lower nominal GDP. 

• VAT remains at 15% after much public debate. However, dropping the proposed increase creates a revenue shortfall.

• Non-interest spending grows by 5.4% annually over three years, with 61% allocated to social wages (grants, education, healthcare, housing, basic services).

• Debt stabilises at 77.4% of GDP in 2025/2026, nonetheless, debt service costs remain high at R1.2 billion per day. 

Revenue and Tax Measures

Fuel levies to increase by 16 cents/litre for petrol and 15 cents/ litre for diesel from June 2025. SARS will receive an additional R7.5 billion to strengthen tax collection and combat illicit trade. New tax measures in 2026 to raise R20 billion. 

Key Sector Allocations 

• Health: R20 billion to employ 800 medical professionals and reduce backlogs. 

• Education: R9.5 billion for teacher retention, R10 billion for early childhood education expansion. 

• Social Support: Old age grant rises to R2,320, and the COVID-19 grant has been extended to March 2026.

• Local Government: R552.7 billion, with support for free basic services to 11.2 million households. 

Given the R10 billion allocated toward early childhood development and potential redesigns of grants-to-jobs pathways, there is a unique opportunity to champion programs that connect youth social support with entrepreneurship or training. Governance and OversightVarious measures are introduced to fight corruption and reduce waste, including:

• New expenditure reviews identify R37.5 billion in potential savings.

• A Presidential-Treasury committee to eliminate underperforming programs. 

• Streamlined PPP regulations and infrastructure project vetting. 

The 2025/2026 walks a tightrope between economic realism and social commitment, adjusting expectations in light of tough global uncertainty, while sustaining investment in people and infrastructure.