Minister Enoch Godongwana before the second Budget speech on 12 March 2025 in Cape Town. (Gallo Images/Brenton Geach)
Finance Minister Enoch Godongwana will table a new Budget on 21 May that revises economic assumptions, such as projected economic growth, recalculates revenue and tax projections, and cuts spending.
Godongwana said in a briefing in Pretoria on Wednesday that VAT would not be increased, and neither would other taxes, which had already been ruled out because of their negative impact on growth. At the same time, he reiterated his commitment to fiscal sustainability and said the government would not increase borrowing.
“We will balance the Budget by managing costs better. Raising other taxes further would harm growth, savings and jobs. Borrowing more would worsen our debt crisis. We already spend more than R1 billion a day servicing debt. We must do more with less, review government spending critically and root out waste. Every cent of public money must be spent wisely,” he said.
Godongwana said he would provide details on his projected savings on 21 May.
The government will also strengthen revenue collection by providing SARS with additional resources to collect more. Through Operation Vulindlela, the government will continue to lay the foundation for economic growth with focused reform initiatives.
This will be Godongwana’s third attempt to table a budget for 2025/26. A first attempt in February was derailed by a revolt in the Cabinet, and a second failed after the DA interdicted the process. At issue in both instances were a proposed VAT increase, which Godongwana has now abandoned.
He put the failure to pass the Budget down to the complexities of coalition politics and said everyone – the Cabinet, Parliament, and the Treasury – had valuable lessons to learn. A new, more consultative process to win support for the budget before it was tabled in Parliament would be designed.
Asked if he would resign over the debacle, Godongwana said he would not, as he was “carrying out my constitutional responsibilities”.
“That decision does not lie with me, it lies with the president. I am mindful that the president has been participating in these processes and understands the nature of the challenges we have been experiencing in dealing with this problem,” he added.
Asked if the Treasury had lost credibility by tabling multiple budgets, Godongwana said the key test of credibility was whether the Treasury would stick to its fiscal targets, particularly to stabilise debt. He reiterated that “fiscal consolidation was still in place.”
He said SA’s debt crisis was not only a concern of the investor community but was a national concern.
“We need to have a conversation as a nation. Should we be paying this amount of money on debt service costs? We are borrowing R2 billion a day. R1 billion of this is for debt service costs. That is a conversation we need to have as a nation. All of that is crowding out investment in developmental objectives. If, over time, we don’t deal with this issue, we will be going to the IMF cap-in-hand. That is not what we want.”
