Budget Speech 3.0: Key takeaways from Godongwana’s third attempt

Finance Minister Enoch Godongwana delivered South Africa’s third budget speech for 2025, confirming no VAT increase, boosting social spending, and outlining major infrastructure investment.

enoch godongwana

Finance Minister Enoch Godongwana delivered South Africa’s third budget speech for 2025 in Parliament on Wednesday, 21 May.

Budget Speech 3.0: What Godongwana revealed

This rare third attempt followed two earlier versions that faced political and public backlash, particularly over a proposed VAT hike.

In the latest speech, Godongwana confirmed that the VAT rate will stay at 15%, a decision made after considering feedback from political parties and the public.

Instead of increasing VAT, government spending has been adjusted. The budget supports critical services while trying to keep the country’s debt under control.

“This is not an austerity budget,” according to Godongwana.

He announced that non-interest government spending would grow by an average of 5.4% over three years, focused largely on essential services.

The budget directs 61% of spending to the “social wage” – meaning money for services like public education, healthcare, housing, and social grants.

For example, the old age grant increased by R120 in April and will rise by another R10 in October, reaching R2,320 per month.

Another key change is that the temporary COVID-19 Social Relief of Distress grant will be extended to March 2026. Government is also exploring ways to link this grant to job-seeking support, potentially including a new allowance for job seekers.

To fund these programs, the government plans to increase the general fuel levy by 16 cents per litre for petrol and 15 cents for diesel from 4 June – the only new tax increase for the year.

Over the next year, Treasury aims to raise up to R35 billion more through improved revenue collection, especially by reducing tax evasion and stopping illicit trade.

Godongwana also announced that public infrastructure spending will exceed R1 trillion over three years. This includes money for road maintenance, rail upgrades, electricity supply improvements, and water infrastructure.

Key investments include R93.1 billion for the national road network and R66.3 billion for commuter rail services.

Another highlight is the reconfiguration of infrastructure planning and spending. New public-private partnership rules will take effect next month to attract more investment from businesses into public infrastructure projects.

In closing, Godongwana emphasized that the revised budget is an effort to balance economic growth, public service delivery, and responsible financial planning.

“This is about delivering on the hope for a better life,” he said.