Mini budget draws applause and criticism across political spectrum

Finance Minister Enoch Godongwana delivered a sobering Medium-Term Budget Policy Statement (MTBPS) in Cape Town on Wednesday, outlining government’s plans to stabilise debt, protect vulnerable citizens and restore fiscal credibility amid low economic growth.

Godongwana said South Africa’s gross loan debt will stabilise at 77.9% of GDP this year before gradually declining. The deficit, he noted, is smaller than projected in May, while revenue collection continues to improve following stronger performance by the South African Revenue Service (SARS).

The Minister revised the 2025 net tax-revenue estimate upward from R1.985 trillion to R2.005 trillion. SARS is expected to collect R19.7 billion more than was forecast earlier in the year, supported by improved compliance and enforcement measures.

Godongwana confirmed that no new major taxes will be introduced in the current fiscal year, and that government will continue to focus on broadening the tax base rather than raising rates. However, excise duties on alcohol and tobacco products, commonly known as “sin taxes,” will increase slightly in line with inflation.

He also announced that senior citizens will benefit from an adjustment to the old-age grant, which rises to R2,270 per month for those aged between 60 and 74, and R2,290 for those aged 75 and above. The child support grant increases to R540 per month, while the disability grant rises to R2,270.

The Minister reaffirmed government’s commitment to social protection, stating that social grants remain a lifeline for nearly 19 million South Africans. He said work continues on evaluating a permanent form of income support once the Social Relief of Distress (SRD) grant expires.

Government spending will continue to prioritise education, healthcare, infrastructure and energy reform. Godongwana announced a R2 billion Credit Guarantee Vehicle to support electricity transmission expansion, which he said would “unlock private investment in critical grid infrastructure.”

The Minister also confirmed that an additional R15.8 billion will be committed to infrastructure investment over the medium term, with the focus on roads, housing, and water projects.

The growth forecast for 2025 has been revised down to 1.2%, with projections of 1.5% and 1.8% over the next two years. Godongwana said low growth remains the biggest threat to reducing poverty and inequality.

Political parties in Parliament gave mixed reactions to the Minister’s statement.

Democratic Alliance (DA) spokesperson on finance, Dr Mark Burke, welcomed the stabilisation of debt and the shift towards a three percent inflation target. “There is much to like about MTBPS 2025,” he said. “Debt will peak this year, and for the first time since 2008, it is projected to decline as a share of the economy.”

Burke said the DA is pleased to see ideas it has long advocated now reflected in government policy, including spending reviews expected to save R6.7 billion and progress in auditing ghost workers, with almost 9,000 cases flagged.

He said while reforms are beginning to take root, faster progress is needed at Eskom and Transnet. “The DA will continue fighting for better fiscal policy that results in more growth and less waste,” he added.

GOOD Party secretary-general Brett Herron said while the budget signals a turning point, it still falls short for millions living in poverty. “The absence of a Basic Income Grant or a national food programme was a great disappointment,” Herron said. “The economy is no longer in free fall, but growth at 1.2% is far too low to address inequality.”

ActionSA Member of Parliament Alan Beesley said the additional R4 billion allocation to SARS vindicates the party’s calls for the agency to be properly resourced. “This is a victory for all South Africans who deserve a government that manages their money efficiently before reaching for higher taxes,” he said.

Beesley, however, warned that the 1.2% growth outlook remains worrying. “South Africa’s stagnation is homegrown,” he said, citing declines in construction, manufacturing and transport sectors. ActionSA also welcomed the Treasury’s renewed focus on tackling illicit trade, which costs the economy around R100 billion annually.

RISE Mzansi leader Songezo Zibi said the mini budget shows progress but warned that low growth remains the country’s biggest obstacle. “We are starting to turn the corner, but tougher decisions are needed to build a working economy,” Zibi said. He added that the reduction in interest payments by R4 billion is commendable, but not enough to meaningfully free resources for development.

The private sector also responded positively to some measures. The South African Photovoltaic Industry Association (SAPVIA) welcomed the R2 billion commitment to a Credit Guarantee Vehicle for transmission expansion, describing it as “a blueprint for action.”

Sim Khuluse, SAPVIA’s technical and policy manager, said the announcement addresses the industry’s main concern — financing for grid expansion. “This commitment enables a new era of public-private partnerships that will help secure South Africa’s energy future,” he said.

Cross-border payments company Verto also praised the Minister for providing macroeconomic stability and aligning fiscal and monetary policy. Verto’s head of revenue, James Booth, said, “The new inflation target of three percent signals a long-term commitment to price and currency stability.”

Booth added that the revised framework would strengthen South Africa’s position following its removal from the Financial Action Task Force (FATF) grey list, but urged further policy steps to ease capital flow for international trade.

As Parliament digests the numbers and economists pore over the details, the message from the Finance Minister was one of cautious optimism; a call for discipline, focus and unity to steer the country back toward stability and growth.