The South African government has unveiled its 2025/26 budget, outlining plans to balance social support, economic growth, and rising debt. With a total expenditure of R2.59 trillion, the budget reflects increased spending on key sectors while tackling fiscal constraints.
Here are the key highlights.
Key Announcements
- VAT Hike: Increased by 1% over two years. The VAT rate will increase by 0.5% on 1 May 2025, and then by an additional 0.5% on 1 April 2026.
- Tax Bracket Freeze: No adjustments, meaning higher real tax burdens for earners.
- Rising Debt & Deficit: Debt at 76% of GDP, deficit at 5%, and debt-service costs at R424.9 billion.
- Government Spending Up: Total budget increased by 5.6%.
Major Allocations
- Social Services: R1.52 trillion, including education, healthcare, and social grants.
- Education: R508.7 billion, with NSFAS receiving R55.4 billion.
- Healthcare: R298.9 billion, focusing on hospital and primary care improvements.
- Social Grants: Increases across old-age (R2,320/month), disability (R2,320/month), and child support (R560/month).
- Economic Growth & Jobs: R289.8 billion for infrastructure, exports, and job creation.
- Security & Law Enforcement: R266.1 billion for policing, defense, and justice.
The 2025/26 budget reflects increased investment in social services and economic development but also highlights ongoing fiscal pressures. With growing debt and potential tax increases on the horizon, balancing financial stability with public spending will remain a key challenge in the years ahead.
*The proposed 2025 Budget is yet to be approved by government.
