The budget speech delivered by the Minister of Finance Enoch Godongwana
The postponement of the tabling of the Budget three weeks ago was a regrettable, but perhaps an understandable feature of multiparty governance.The delay has stimulated an unprecedented level of public debate about the difficult policy trade-offs we, as a nation, face.
But the truth is that our economy has stagnated for over a decade. In that time, GDP growth has averaged less than 2 per cent, far below the level required to meet our expanding list of needs. Madam Speaker as debt stabilises, a growing primary surplus will enable the government to reduce debt-service costs as a proportion of revenue.
In this regard, our fiscal strategy stabilises debt service costs as a percentage of revenue in 2024/25 by maintaining a primary budget surplus. The last R70 billion debt takeover will now be replaced with R40 billion in 2025/26, and R10 billion in 2028/29. This will result in a saving for the government of about R20 billion.
• The water-use licenses backlog has been cleared, unlocking billions in investment and freeing projects that had stalled because of the backlog. In transport, the South African National Roads Agency will spend R100 billion over the medium term to keep the national road network in good condition. This will enable commuters from areas like Mamelodi, Kwa-Mashu, Motherwell and Khayelitsha to catch a train every 10 minutes, to get to and from work and significantly reduce the money that low-income households spend on transport.
To further accelerate infrastructure delivery and effectiveness, we are continuing reforms to facilitate greater private sector participation, capital budgeting reform and alternative infrastructure financing.The new regulations for public-private partnerships have been finalised and will take effect on 1 June 2025.
Additional guarantees may also be considered to refinance the entity’s maturing debt as well as its capital investment programme.A request for information for a multi-line transmission package will also be issued by the Independent Power Producers Office in July this year, followed by a request for proposals in November.Madam Speaker, we have reconfigured the BFI to run multiple bid windows instead of just one annual window.The first window is now open and will close mid-April.
This, Madam Speaker, is how we plan to leverage infrastructure investment to ease supply side constraints to the economy and improve the quality of public services the people get.These have to do with the government properly fulfilling its service delivery mandate. Increasing corporate or personal income tax rates would generate less revenue, while potentially harming investment, job creation and economic growth.
Our top personal income tax rate and our personal income tax collections as a percentage of GDP are far higher than those of most developing countries.Taking on additional debt to meet the spending pressures was also not feasible. With this in mind, SARS is allocated R3.5 billion in the current financial year and an additional R4 billion over the medium term.
The rewards of higher tax compliance and efficiency take time. Once again, the investments we make today in SARS will allow the collector the time to make improvements. This means that the money allocated to departments ends up paying for previous services and goods rather than for the current needs, setting off a vicious cycle of budget shortfalls, unpaid invoices, and a crisis in cashflow and the planning and predictability of budgets.As a result, consolidated spending, which excludes interest payments, increases from R2.4 trillion in 2024/25 to R2.83 trillion in 2027/28.
This agreement will cost an additional R7.3 billion in 2025/26, R7.8 billion in 2026/27 and R8.2 billion in 2027/28. Our learner-teacher ratios remain higher than we would like, meaning that we still need more teachers in classrooms. R28.9 billion is added to the health budget, mainly to keep about 9 300 healthcare workers in our hospitals and clinics.
The truth is that ours is one of the most comprehensive social safety nets among emerging economies. This reflects our commitment to addressing poverty and inequality, while keeping our spending sustainable.In this budget, we have also made a provision to replenish funding for our security functions and peace-keeping commitments.
There are remaining issues that require work during the year which may require funding later this year. These includes:• Accommodating population changes that impact on the provincial equitable share allocations; We recognise the urgent need to address this. We are not deaf to the public’s concern about wasteful and inefficient expenditure.
• The Treasury will implement significant changes to the budget process by reassessing the initial assumptions informing budget allocations, with a view to creating room for improved spending.They allow us to systematically assess whether public expenditure is effectively aligned with the priorities of this government, and whether it delivers the best possible value for money and impact for the people of South Africa while keeping us on the path of fiscal sustainability.
Performance based conditional grants to metropolitan municipalities are also introduced, linked to institutional, governance and financial reforms to improve services.Madam Speaker, the incentives in our current disaster management system are skewed towards relief and rehabilitation, when mitigation and readiness to minimise damage is the most cost effective response.
As outlined by the President in his State of the Nation Address, phase 2 of Operation Vulindlela, the institutional structure of local government will be reviewed through the updating of the white paper of local government. For 2025/26, this includes critical institutional, governance and management changes to create an enabling environment for long term investment in infrastructure.
Honourable Members, this budget is also a proposal to you as the Parliament that has been democratically elected to represent the aspirations and interests of all South Africans by confronting the difficult choices needed to move our country forward.
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