State of the spend: Charting Budget 3.0

Daily Maverick

21-05-2025

You'd be forgiven for losing track. South Africa is now on Budget Speech 3.0 in just four months.
Fiscal policy keeps morphing to meet political pressures and economic realities and the National Treasury's latest figures reveal some subtle shifts and trade-offs.
Here is the visualised story behind the numbers, taking a look at where every R100 of your tax goes, what's driving up debt, and how the scrapped VAT proposal rewrote the books in-between budgets.
Highlights from 2025's third budget reveals a larger negative budget balance than Budget 2.0, tabled 12 March, and a loss in GDP of about R2-billion since National Treasury's first try in February.
After the proposed VAT hike was scrapped following legal and political pressure, Finance Minister Enoch Godongwana announced on 21 May that a general fuel levy will come into effect on 4 June. No changes were made to other personal income tax or any tax brackets, but a R20-billion tax plan is set to be revealed in Budget 2026, unless SARS can strap up and rake in some extra rands.
Speaking of tax… have you ever wondered exactly what the government does with the money that's dutifully subtracted from your pay cheque every month? Looking at the National Treasury's consolidated spending by functional and economic classification, we've analysed which departments score and which departments only manage to rake a few cents.
The debt-to-GDP ration of the country is an expression of how manageable the country's debt is. Budget 3.0 revealed the highest metric in this category since 1994. The country's GDP is also expected to grow only 1.4% in 2025.
The country's gross borrowing requirement, or borrowing cost, saw an increase of R6.24-billion as Treasury had to stretch out their hands to plug the hole left by the withdrawn VAT hike.
This budget projects consolidated spending growth averaging 5.4% annually, from R2.4 trillion in 2024/25 to R2.81 trillion in 2027/2028. Departments have largely retained their baselines, while the Treasury aimed to keep service delivery areas protected.
In case you wanted to know how Budget 3.0 stacks up against its previous iterations… Spot some changes in decisions about personal income tax rebates, VAT rates dropping from 2% to 0.5% then to none at all, and a public-sector wage bill whose allocated spending over the next three years has remained unchanged, even three budgets later. DM