Finance minister Enoch Godongwana tabled his much-anticipated budget on Wednesday afternoon in parliament.
Here are five things that came out from the budget:
VAT increase:
The government has proposed increasing VAT by 0.5 percentage point in 2025/26 and another 0.5 percentage point in 2026/27, bringing the VAT rate to 16%. Godongwana said there will be no inflationary adjustments to personal income tax brackets, rebates, and medical tax credits, raising an additional R28bn in 2025/26 and R14.5bn in 2026/27.
Debt:
Godongwana said the government debt is projected to stabilise at 76.2% of GDP in 2025/26, with the budget deficit narrowing to 3.5% by 2027/28. He said debt-service costs remain a concern, consuming R389.6bn, which is 22 cents of every rand raised in revenue.
Infrastructure investments:
Over R1-trillion will be allocated to public infrastructure over the next three years. This includes R402bn for transport and logistics, R219.2bn for energy infrastructure, and R156.3bn for water and sanitation. The Passenger Rail Agency of SA will receive an additional R19.2bn for rail infrastructure, while the SA National Roads Agency will spend R100bn over the medium term to keep the network in good condition.
Public sector wages:
Godongwana said an additional R28.9bn will be allocated to retain 9,300 healthcare workers and 800 post-community service doctors. He said R19.1bn would be added over the medium term to keep about 11,000 teachers in classrooms. Regarding early childhood development, the minister said the subsidy has not increased from the 2019 level of R17 per child per day and to remedy this, an additional R10bn over the medium term is allocated to increase the subsidy to R24 per day per child.
Social grants:
Social grants will increase, with old age and disability grants rising by R130, child support grants by R30 and foster care grants by R70. The social relief of distress grant that was introduced during the Covid-19 pandemic has been extended by a year to end in March 2026, with R35.2bn allocated for this. Godongwana said the future form and nature of the grant will be informed by the outcome of the review of active labour market programmes.
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Five key takeaways from the budget
Image: GCIS
Finance minister Enoch Godongwana tabled his much-anticipated budget on Wednesday afternoon in parliament.
Here are five things that came out from the budget:
VAT increase:
The government has proposed increasing VAT by 0.5 percentage point in 2025/26 and another 0.5 percentage point in 2026/27, bringing the VAT rate to 16%. Godongwana said there will be no inflationary adjustments to personal income tax brackets, rebates, and medical tax credits, raising an additional R28bn in 2025/26 and R14.5bn in 2026/27.
Debt:
Godongwana said the government debt is projected to stabilise at 76.2% of GDP in 2025/26, with the budget deficit narrowing to 3.5% by 2027/28. He said debt-service costs remain a concern, consuming R389.6bn, which is 22 cents of every rand raised in revenue.
Infrastructure investments:
Over R1-trillion will be allocated to public infrastructure over the next three years. This includes R402bn for transport and logistics, R219.2bn for energy infrastructure, and R156.3bn for water and sanitation. The Passenger Rail Agency of SA will receive an additional R19.2bn for rail infrastructure, while the SA National Roads Agency will spend R100bn over the medium term to keep the network in good condition.
Public sector wages:
Godongwana said an additional R28.9bn will be allocated to retain 9,300 healthcare workers and 800 post-community service doctors. He said R19.1bn would be added over the medium term to keep about 11,000 teachers in classrooms. Regarding early childhood development, the minister said the subsidy has not increased from the 2019 level of R17 per child per day and to remedy this, an additional R10bn over the medium term is allocated to increase the subsidy to R24 per day per child.
Social grants:
Social grants will increase, with old age and disability grants rising by R130, child support grants by R30 and foster care grants by R70. The social relief of distress grant that was introduced during the Covid-19 pandemic has been extended by a year to end in March 2026, with R35.2bn allocated for this. Godongwana said the future form and nature of the grant will be informed by the outcome of the review of active labour market programmes.
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