Budget Speech: Economist Weighs In As Government Sets Aside R2.4 Trillion in Consolidated Spending

• The finance minister, Enoch Godongwana, delivered the much-anticipated budget speech less than a month after it was postponed
• Godongwana said that the government proposed setting aside R2.4 trillion for the 2024/25 year and R2.83 trillion in the 2027/28 financial year
• Briefly News spoke to Dr Kenneth Creamer, an economist from Wits University about the impact this could have on the economy if the budget is impmeneted

Tebogo Mokwena, a current affairs journalist, contributed analysis of policy changes and the budget speech during his 7 years at Vutivi Business News and Daily Sun.

WESTERN CAPE — Dr Kenneth Creamer, an economist from Wits University, told Briefly News that a disagreement over the budget spending would be quite damaging to South Africa's economic prospects. This was after Finance Minister Enoch Godongwana delivered his budget speech on 12 March 2025 after it was postponed in February.

How much will the government spend?

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Godongwana said in his speech that the government plans on spending R2.4 trillion for the 2024/25 period and R2.83 trillion in the 2027/28 period. He added that provinces will receive R2.4 trillion over the mid-term period. He also said that the government's strategy with thisyear's budget aims to achieve a faster inclusive growth through four pillars. These are maintaining macroeconomic stability, implementing structural reforms. accelerating infrastructure investment and improving state capability.

GNU disagreements bad for economy: Creamer

Dr Creamer told Briefly News that with the ongoing disagreement within the Government of National Unity about the budget. the country is running serious risks which could be quite damaging to South Africa's economic prospects.

He added that thebuget is a key policy instrument which can assist insolving the country's problems. This is if it successfully balances the raising of sufficient tax revenue against the efficient provision of public services and investment in public infrastructure and social security systems.

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"On the other hand, if the budget process becomes overly politicised and loses its credibility, this will weaken state capacity further and will undermine the potential for long-term economic planning," he said.

"Such a path will make it harder forus to achieve our growth andemployment objectives. The ongoing lack of consensus about the budget in the GNU is a serious cause for concern."

Godongwana also proposed that the Value-Added Tax (VAT) be increased by 0.5% over the mid-term period. This was despite widespread opposition from the public sector, the private sector and different political parties.

What you need to know about the budget speech

• Cabinet rejected Godongwana's proposed amendment to the budget speech after the initial speech was rejected
• The Democratic Alliance rejected the VAT increase and proposed different alternative methods to generate the revenue a VAT increase would generate
• Godongwana also considered slashing the Social Relief Distress grant to prevent the need for a VAT increase

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Enoch Godongwana allocates R284.7 billion for grants

In a related article, Briefly News reported that Godongwana allocated over R280 billion for social grants during his budget speech. He said pensioners will get R130 more.

He said that the child support grant would be increased by R30 to R560 and the foster grant would go up by R70. The increase for the disability grant will be the same as the previous year.

Source: Briefly News