Lesedi Sibiya-Diplomatic Inside

Minister of Finance Enoch Godongwana delivered his third budget speech this year with the aim of making certain amendments from his previous budget speech in early March this year. 

The reason for this revised Budget Speech is because the Government of National Unity (GNU) could not come to a cohesive agreement about the national budget, which did not sit well with the markets. One of the key elements of this speech is that the social grants increase of 1.6 Billion rand will remain in place as expressed in the last budget speech on 12 March, 2025. The COVID 19 Social Relief and Distress grant will have an extension until 31 March 2026. R32.5 billion is allocated to ensure that each citizen of South Africa receives R370 per month from this social grant budget. Another key factor is that Value Added Tax (VAT) will remain at 15%, Godongwana has said “This decision reflects our commitment to listen to South Africans, and to all political parties represented in this house…today’s budget has taken these views into account”. Godongwana further explains that the decision to amend the initial VAT increase, which was at 17%, is because there is a lack of viable sources of revenue and this has made it difficult to fund various government programmes and projects. However, Godongwana has assured that this current budget will solve these problems and provide reasonable sustainability. 

The Finance Minister has also elaborated that our Gross Domestic Product (GDP) is estimated to grow at 1.4 per cent in 2025, which is lower than the previous estimate of 1.9 per cent that was projected in the last Budget Speech. “Over the next two years, we project real GDP growth to rise moderately, to 1.6 per cent in 2026 and 1.8 per cent in 2027” said Godongwana. Fuel levy’s will also be increased by 16 cents per litre for petrol and by 15 cents per litre for diesel starting from June 4,2025. Godongwana has expressed that this will be the first fuel levy increase in three years. The Finance Minister has said “Unfortunately, this tax measure alone will not close the fiscal gap over the medium term…the 2026 budget will therefore need to propose new tax measures, aimed at raising R20 billion”. 

Enoch Godongwana also took the liberty of sharing a letter that he received from a medical student studying at the University of Cape Town (UCT) by the name of Sarah Stein. The letter expressed the need for more resources in government hospitals as it is becoming difficult to treat patients and also having to decide which patients are more of a priority to receive treatment as there are not enough resources for every patient to receive the treatment they deserve. For this reason, the Finance Minister has expressed that the budget will maintain the expenditure trajectory presented in March 12 budget speech earlier this year. “Addressing the persistent spending measures to restore critical frontline services and invest in infrastructure is critical for improving access to basic services and lifting economic prospects”. He further explains “As a result, total allocated spending excluding interest will amount to R6.69 trillion over the medium term”. 

Over the next three years, the government will spend R6.69 trillion over the medium term with an addition of R 180.1 billion, R1.04 Trillion will be spent on the provincial education sector and R9.5 billion will be added over the medium term. R845 billion will go to provincial healthcare, R402 billion allocated to transport and logistics, R219.2 billion will be allocated to energy and R156 billion will be allocated for water sanitation. 

This amended budget speech has proved to be more concise as Finance Minister Enoch Godongwana expresses his full confidence in this revised Budget for the fiscal year and aims to improve the country’s economy exponentially.