SA BUDGET POSTPONED

 SA Budget postponed

Finance Minister Enoch Godongwana is set to deliver the 2025 Budget Speech on 12 March 2025, following a postponement of the 2025 Budget Policy Statement on Wednesday, 19 February 2025.

The Budget was subsequently postponed due to political differences over the increasing of value-added tax (VAT) by two percentage points, from 15% to 17%.

The increase in VAT was expected to raise around R58bn in revenue to cover spending pressures over the medium term.

It is unclear what alternative methods will be used but the four options are:

Adjustments to other taxes

Accessing the Gold and Foreign Exchange Contingency Reserve Account again

Reducing spending and/or

Increasing debt issuance

It is not uncommon for a coalition government to encounter increased spending pressures. Coalitions in emerging markets typically result in higher budget deficits.

It is difficult to reduce spending while it’s also difficult to increase taxes. GDP growth projections for 2025 were disappointing given better energy security and some improvements in logistics. Treasury expects 2024 GDP growth to come out at 0.8% driven by a weak third-quarter print.