Ten Takeaways From Today’s Budget Speech

Minister of Finance Enoch Godongwana presented the medium-term budget in Cape Town on Wednesday. Archive photo: Ashraf Hendricks

Here are ten takeaway points from the Minister of Finance Enoch Godongwana’s medium-term budget policy speech (MTBPS) on Wednesday:

1. Our economy is growing faster than expected, though still not fast enough. Gross domestic product (GDP) is forecast to rise by 1.2% this year, more than double the growth rate in 2024.
2. For the first time since 2008, South Africa’s national debt is not rising as a percentage of GDP.
3. This means we are spending less on interest payments and debt repayments – R4.8-billion less this year than expected. (read our explainer on government debt)
4. We have a new inflation target of 3%. Previously, the inflation target was 3% to 6%. This new target will be taken into account by the SA Reserve Bank when it sets interest rates. (read our explainer on inflation)
5. Tax revenue is better than expected. Families are spending more and paying more VAT, and companies are paying more tax. Extra funding for the SA Revenue Service has also boosted its ability to collect tax.
6. This means there is more room for additional spending of R15.8-billion this year. This includes additional funding for education – more than R2-billion for early childhood development – and R754.5-million for the HIV treatment programme. An additional R4.1-billion has been allocated to disaster relief in schools, pipelines, clinics and substations damaged by floods in KwaZulu-Natal. R2-billion has also been allocated to rebuilding Parliament, and R1-billion to the Independent Electoral Commission for the 2026 municipal elections.
7. But while there is increased revenue this year, gross revenue is expected to fall short by R15.7-billion over the next two years.
8. To keep expenditure down, low-priority programmes are to be closed down, saving R6.7-billion. More than half of this will come from putting an end to people double-dipping and defrauding the social grants system.
9. Municipalities which don’t perform will not get grants the way they used to, due to a reform of the Municipal Infrastructure Grant (MIG).
10. Tax increases of R20-billion are planned for 2026. These might be withdrawn if SARS raises the extra money. “If the R20-billion is not achieved, there are two options open to us: increase taxes or cut expenditure,” Godongwana said. “That’s how this thing works. We must find revenue or cut expenditure.”

Several organisations under the banner People Against Budget Cuts gathered outside parliament on Wednesday ahead of the budget speech, calling for higher taxes on wealthy people and increased social spending.

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