2025 South African Budget Speech Highlights

Fiscal Responsibility: Proposals to control national debt while increasing spending on social security and infrastructure. This involves navigating difficult policy trade-offs and facing ongoing uncertainty due to lack of unanimous GNU support.

Taxation: Proposed VAT increases and no personal income tax relief will likely curb consumer spending. Increased allocation to SARS aims to broaden the tax base and improve efficiency to avoid further tax hikes. A spending review is underway to identify and cut wasteful expenditure.

Economic Growth Initiatives: Increased investment in infrastructure, facilitated by new regulations easing public-private partnerships (PPPs) starting June 10, 2025. The creation of ring-fenced utilities for water and electricity aims to improve service delivery. A proposed credit guarantee vehicle, focusing initially on independent energy transmission, seeks to stimulate investment.

Social Welfare: Above-inflation increases in social grants, expansion of VAT zero-rated food items, and no fuel levy increase aim to ease cost-of-living pressures. However, the budget acknowledges that social security alone is insufficient to significantly improve living standards; inclusive economic growth is crucial.

Combating Crime and Corruption: Continued efforts to remove South Africa from the FATF grey list are underway, emphasizing the importance of combating financial crime and corruption to protect the economy.

Overall: The budget emphasizes the need for urgency, action, and pragmatism to strengthen South Africa’s fiscal position and economy, addressing both immediate needs and long-term sustainability amidst global uncertainty. Cooperation amongst GNU parties is crucial for successful implementation.

Sourced information from: The Banking Association South Africa