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National Budget 2025: A wider rising primary budget surplus on anticipated tax revenue growth.
- Macroeconomic assumptions: National Treasury has revised its 2025 growth forecast lower, but still expects the economy to expand by more than 1% in 2025 and by an annual average of 1.7% in 2026 and 2027. Fixed investment spending growth was revised sharply lower for 2025. However, it is still projected to increase by over 3% in 2025 and an annual average of 4.2% in the following two years as macroeconomic reforms help unlock the logistical bottlenecks. Risks to growth are tilted to the downside and emanate primarily from offshore.
- Revenue: After the rejection of the value-added tax (VAT) rate increase, the Treasury has not tabled new tax measures. Proposals to boost revenue are limited to the inflation-related adjustment of the fuel levy, after it was kept steady for three years. Over the Medium-Term Expenditure Framework (MTEF), which runs from FY2025/26 to FY2027/28, faster economic growth and a higher tax buoyancy rate will underpin the revenue gains. A more efficient SARS is central to the government's efforts to improve tax compliance and thus boost revenue.
- Expenditure: Growth in total spending reduces marginally to 5.4% a year between 2025/26 and 2027/208, with the Treasury stressing that significant expenditure cuts are planned for 2026/27 and beyond. These will entail mainly terminating inefficient programmes and cleaning up the public service pay database to root out ghost workers. Debt service costs will remain the fastest rising item, absorbing more than 21% of revenue annually over the MTEF.
- Budget balance: The budget deficit remains wide in 2025/26 and drops to below 4% of GDP only in 2026/27. The primary surplus is projected to widen to above 2% of GDP by 2027/28, which will help to contain the increase of public debt.
- Debt metrics: The public debt ratio peaks at 77.4% in 2025/26, above 76.2% in the March Budget statement, and drops gradually to just below 70% by 2032/33.