Each year, the national budget speech sets the economic direction of South Africa and shapes policies on economic growth, infrastructure investment and social development. But beyond fiscal jargon and financial forecasts, it is also a statement of intent. It reflects government priorities, the economic health of the country, and the everyday realities of South Africans.
With Finance Minister Enoch Godonwana scheduled to give her 2025 budget speech on March 12, we will all look to whether the government aligns with a broader economic growth plan, particularly in the wake of the National Speak (SONA).
Budget Speech and Economic Growth: Signs of a Vulnerable Recovery
South Africa avoided the recession and recorded its second consecutive quarter growth. GDP rose 0.5% in the third quarter of 2024 and 0.8% in the fourth quarter of 2024, but not much, but a much needed signal that the economy is stable. Employment figures are also progressing slowly, with unemployment rates falling from 32.9% to 31.9% by the end of 2024.
This fragile recovery is partly due to government-led job creation initiatives, backed by R13.6 billion allocations to infrastructure projects and support small and medium-sized enterprises. The JSE All Share Index rebounded from 70,000 points in mid-2025 to 74,500 points by early 2025, but the decline in global oil prices has given the pump some easing. Importantly, South Africa's G20 president is helping to restore investors' trust.
The big question now is whether future budgets will provide bold economic solutions or another tougher option.
VAT discussion and budget postponement
For the first time in South Africa's democratic history, the budget speech was postponed due to a fierce internal debate within the Union government, which proposed a 2% increase in VAT.
While hiking is essential to cover a R60 billion budget shortfall, it has been exacerbated by the withdrawal of US PEPFAR funds in the HIV/AIDS program, opposition parties are vehemently opposed to the proposal and warn that VAT hiking will disproportionately burden low-income households.
A 0.75% increase in VAT under consideration has been proposed ahead of Wednesday's budget speech. Regardless of the outcome, this argument highlights the underlying issue. The government needs more money, including the option of raising income through taxation or managing responsibly borrowing.
What to expect from the 2025 budget speech
The harsh reality of fiscal integration
Unfortunately, although not ideal, you need to deal with the fiscal deficit. And if the government doesn't borrow any more, the shortage will likely fall on South Africans. This means that the Ministry of Finance has two difficult choices left.
Increase taxes (this is dangerous and financially painful for households). Reduce spending (which can affect social services and critical programs).
The possibility is that South Africa can see a combination of both. Ministry of Finance reasoning? Reducing debt improves the sovereign's credit rating, which reduces borrowing costs and frees up funds for future spending. The challenge is the need to balance this and protect the poor from regressive taxation.
Infrastructure Investment
Despite financial pressure, infrastructure remains a priority. History shows that wise investments in transportation, utilities and energy can unlock economic growth.
One outstanding example is the Gautrain extension. This increases connectivity between Pretoria and Johannesburg, reduces travel time and supports business efficiency. Such projects also boost tourism and event-based industries, especially large concerts and conferences.
Investing in infrastructure is directly linked to energy stability. The government's R254 billion debt relief plan for Eskom aims to create long-term energy security for both businesses and households, along with promoting renewable energy solutions.
Social grants
The rising costs of living will increase pressure to expand social welfare programs. The government may consider increasing existing grants, particularly social relief for distress grants, which provide important safety nets to millions.
Healthcare and NHI
Healthcare remains one of the most expensive government commitments. In 2024, R25.9 billion was allocated to the sector, funding NHI pilots, healthcare infrastructure and expanding solutions to medical shortages.
The government is also expanding rural health facilities, with the aim of reducing the burden on new clinics in KwaZulu-Natal and major hospitals in the Eastern Cape.
challenge? Maintain NHI funding while balancing broader medical needs. With limited fiscal rooms, the Ministry of Finance needs to be clear about how it will fund the next phase of the NHI without putting a burden on taxpayers.
SMME and Township Economy Stimulation
Programs such as the Township and the Rural Entrepreneurship Program (TREP) have played a key role in supporting informal businesses and SMMEs. Since 2020, we have provided billions of funding to help township entrepreneurs formalize and expand their businesses.
With the informal sector employing over 5 million people, SMME's covered funds are essential. However, many small businesses still struggle with deficits and limited access to credit. Future budgets need to provide more than just funding. Regulations need to be simplified and market access is improved.
Education and skills development
Over R300 billion allocated to education, the government focuses on school infrastructure, teacher training and funding for higher education. TVET Colleges received R15 billion last year to expand the training deployed in the industry, helping to deal with the unemployment of young people. However, the system still faces challenges, including delays in funding and student protests.
This year's budget should ensure efficiency in fund distribution while strengthening the technical and occupational pathways for young people in South Africa.
South Africa's budget decision
The budget is not merely a policy document, but shapes the living experiences of South Africans. All allocations affect education, healthcare, business opportunities and social mobility.
The 2025 budget speech comes at a key moment. The introduction of a coalition government adds pressure to provide a balanced and realistic financial plan that will stabilize the economy while addressing social needs.
Budget Speech 2025 FAQ
When will your budget speech be?
The 2025 budget speech will be given by Parliamentary Finance Minister Enoch Godonwana on March 12, 2025.
Where can I see it?
The speech will be broadcast live on Congressional Television (DSTV), streamed online via Congressional official channels, and available on RSA Congressional YouTube.
Have budget speeches been postponed previously?
No, this is an unprecedented event in democratic South Africa. However, similar delays have occurred in other countries when further deliberations are needed.
Will VAT definitely increase?
The government is considering increasing the VAT increase from 15% to 15.75% to cover the budget shortage, but the final decision will be announced in a speech.
How does budget impact South Africans every day?
It determines the amount of funding for public services, social grants, infrastructure, and job creation, and sets tax and inflation control policies.
