With Finance Minister Enoch Godongwana’s much-anticipated 2025 Budget Speech set for February 19, South Africans are eager to learn about the government’s fiscal priorities for the year. This speech will play a crucial role in addressing the country’s economic challenges and laying the groundwork for sustainable growth.
South Africa’s economy has shown signs of improvement this year. Lower inflation rates, reduced fuel prices, and increased business and consumer confidence have boosted growth prospects. Standard Bank’s chief economist Goolam Ballim forecasts a GDP growth of at least 1.8% in 2025, up from last year’s 0.7%.
Thanks to higher-than-expected mining revenue, the country reported a primary budget surplus last year—the first in 15 years. This surplus means there is no immediate need for major tax hikes. However, expect increases in taxes on sugar, carbon, tobacco, and alcohol. The government is also considering a wealth tax and adjustments to VAT structures.
One of the key highlights is the potential introduction of a Basic Income Grant to replace the current Social Relief of Distress (SRD) grant. This permanent grant aims to provide a safety net for the most vulnerable members of society.
The budget is likely to emphasize increased spending on infrastructure, focusing on energy, transport, and manufacturing. The government plans to streamline regulations and offer targeted tax incentives to attract investment and ensure long-term economic stability.
With South Africa’s debt-to-GDP ratio projected to reach 74.7% this year, stabilizing this ratio is crucial. The budget will include measures to manage and reduce debt levels, ensuring the government’s ability to fund essential services.
The budget speech will tackle pressing issues such as high unemployment rates, struggling public and municipal services, and endemic levels of crime and corruption. The government will need to find a balance between expenditure and revenue in a low-growth environment without significantly raising taxes or increasing debt.
