JOHANNESBURG – Business Leadership South Africa (BLSA) praised the approach taken by Finance Minister Enoch Godonwana in his budget proposal.
The third iteration of the 2025/26 budget maintains the expenditure trajectory presented in the 19th February 2025 budget despite the absence of R75 billion generated by the increased rejected VAT.
“We're excited to announce that BLSA CEO Busisiwe Mavuso said:
“The latest budgets are trying to embrace the needs of all areas of society.
“But it is also a harsh reflection of our economy and the difficult reform work we have ahead of us.”
Finance Minister Godonwana has emphasized that additional spending will be reduced over the medium term by R68 billion, with the government's baseline spending allocations in all sectors remain largely unchanged.
The BLSA said this approach will allow for faster economic growth in the long term.
To address the revenue shortage of the R75bn VAT, fuel collections for 1°C and 16c/liter and 15c/liter diesel have increased significantly for the first time in three years, but this is the first time in three years, but will put an even more strain on the economy.
It is expected to generate R35bn in 2025/26, collides with the most difficult and tense consumer spending for low-income households.
For further revenue growth, Minister Godonwana has allocated an additional R750 million to South Africa's revenue services (SARS) to increase its effectiveness in raising more revenue.
SARS shows that this allocation could increase R2 billion to R5 billion in annual additional revenue.
Some of the additional allocations to SARS will be used to improve modernization, including targeting targets of illegal trade in tobacco and other regions.
From that point of view, the BLSA strongly praised the formal spending review conducted by the National Treasury Ministry for Minister Godonwana's formal spending review, saying it is assessing spending up to 2013 to identify waste and inefficiency.
They discovered potential savings of R37.5 billion with improved surveillance and operational changes.
The minister also said that underperforming programs will be shut down as the 2026 MTEF budget process is being redesigned.
“We need this more,” Mavuso added, “especially the entities of all states.
She said South Africa needs a calm assessment of the return on investment brought by each entity.
“A more streamlined and efficient state will significantly contribute to an economy that is functioning well,” Mavuso said.
It retains the R1TN allocation over three years across critical infrastructure. The BLSA said it is important to support many of the above reforms and raise the growth outlook.
“Overall, the fiscal trajectory remains largely intact, but the debt ratio increases slightly due to low GDP,” BLSA said.
“It is important for the country's credibility to stick to this, especially when credit rating agencies are beginning to improve their ratings of SA outlook. A small but important step before actual credit ratings begin to rise from their sub-investment grade status.”
In 2025/26, government debt is projected to stabilize at 77.4% of GDP, up 1.2% from its budget forecast on March 12th.
Related: Budget 3.0 Most are welcome: No VAT hike, general fuel collection will rise next month – Brush
