STANLIB: Budget 2025: government makes a second attempt to satisfy all parties

13 March 2025 | Economy | Budget 2025 | STANLIB

The Minister of Finance presented revised Budget 2025 proposals to Parliament on Wednesday after a tsunami of objections to his original plan to raise VAT by two percentage points to finance a spending overrun.

You can read a summary of the Budget proposals and their implications by our Chief Economist, Kevin Lings, or listen to short podcasts in which our experts present their reactions and analysis. To access the material, click on the links below.

Explore the full analysis here

Summary of the topics covered

Budget 2025: Urgent action required to boost growth rate

STANLIB Chief Economist, Kevin Lings says that although the Minister proposes to raise VAT less than originally intended, he has sought revenue elsewhere by removing an adjustment for fiscal drag and making smaller increases in social grants. Hopefully, opposition to the VAT increase from the DA will be resolved by 2 April. Kevin says the biggest disappointment in the Budget is the weak growth outlook over three years, despite its focus on infrastructure and public-private partnerships.

Listen to the podcast here

Budget 2025: Bonds, rand welcome careful revenue and spending proposals

Sylvester Kobo, STANLIB Deputy Head of Fixed Income, explains the VAT hikes of 0.5 percentage points proposed over each of the next two years will yield government about R43 billion in additional revenue, falling short of government needs. Other revenue measures will not cover the shortfall, but the government plans to use cash reserves rather than raise new debt. Bonds and the rand reacted positively.

Listen to the podcast here

Budget 2025: Focus on enhancing the quality and quantity of SA’s infrastructure

Tarryn Sankar, STANLIB Fixed Income Head of Credit and Investment Research, highlights key Budget measures, including a shift from SOE support to direct infrastructure investment, with a focus on innovative funding and consolidation to enhance delivery. While the risk of a sovereign rating downgrade is low, economic growth is vital to enable fiscal discipline.

Listen to the podcast here

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