Experts warn Budget 2025 is a ‘book balancing act’ that lacks growth stimulus

Minister of Finance Enoch Godongwana’s budget is a book balancing exercise and will not stimulate growth, say experts.

Political economic analyst Daniel Silke said: “Even the department of the Treasury’s own projections for growth over the next three years remain below 2%, which is grossly inefficient and insufficient for a country like ours,” Silke said.

Political analyst Sandile Swana said although the value-added tax (VAT) increase appeared to be low, the poor and the middle class would be affected adversely.

VAT increase appears low but poor, middle class will suffer

He said there were other items vital to low and medium income earners which could have been included on the zero-rating list.

“The road that the minister is travelling now has no precedent. On 23 May, he has to face parliament and his budget will be scrutinised line by line,” Swana said.

He said he understood that even the trade union movement was unhappy with the VAT increase, even though it was lower than anticipated.

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The left within the ANC alliance had reserved time to attack the minister over the tax raise.

Swana said the minister was under pressure within South Africa and by the International Monetary Fund, which required the country to raise its VAT to 19% to be on par with the rest of the world.

“The 0.5% is the first step towards 19%. They are giving us this increase so that we get used to small increases, otherwise they are aiming for 19% as demanded by the IMF,” the expert said.

Mbalula lashes out at Steenhuisen

In his reaction to the budget, ANC secretary-general Fikile Mbalula lashed out at Minister of Agriculture and DA leader John Steenhuisen.

In a message he posted on X, Mbalula said: “Steenhuisen was so clear: ‘stop implementing transformative laws if you want us to support the budget!’ This is what their objection is about, not a concern on the poor. This is crazy stuff,” Mbalula tweeted.

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Backing Godongwana, Mbalula said to maintain efficiency and service delivery, public service wages will increase by 5.5% in 2025-26 – 1% above the projected CPI – a commitment to those who keep South Africa running!

“The VAT increase will be offset by higher social grants and an expanded list of zero-rated essential foods to shield lower-income households,” he said.