{"id":12851,"date":"2025-03-12T10:57:56","date_gmt":"2025-03-12T11:57:56","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=12851"},"modified":"2025-03-16T12:37:02","modified_gmt":"2025-03-16T12:37:02","slug":"read-finance-minister-enoch-godongwanas-full-budget-speech-here","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/read-finance-minister-enoch-godongwanas-full-budget-speech-here\/","title":{"rendered":"Read Finance Minister Enoch Godongwana&#8217;s full budget speech here"},"content":{"rendered":"<p>This <a target='_blank' rel=\"nofollow\" href=\"https:\/\/www.iol.co.za\/business-report\/opinion\/read-finance-minister-enoch-godongwanas-full-budget-speech-here-c6d9fb6f-98c1-437d-9724-f0dbdf2ac166\">post<\/a> was originally published on <a target='_blank' rel=\"nofollow\" href=\"https:\/\/www.iol.co.za\/\">this site<\/a><\/p><p><img decoding=\"async\" src=\"https:\/\/image-prod.iol.co.za\/16x9\/800?source=https:\/\/iol-prod.appspot.com\/image\/1f28fa009b9bbbc6d539bd431a48ae99a9d53091\/2000&amp;operation=CROP&amp;offset=0x161&amp;resize=2000x1125\" class=\"type:primaryImage\" \/><\/p>\n<p>&nbsp;<\/p>\n<p><span>Honourable Speaker, Thoko Didiza&nbsp;&nbsp;<\/span><\/p>\n<p><span>Deputy Speaker, Annelie Lotriet&nbsp;&nbsp;<\/span><\/p>\n<p><span>Chairperson of the National Council of Provinces, Refiloe Mtshweni-Tsipane&nbsp; Deputy Chairperson of the National Council of Provinces, Les Govender&nbsp; His Excellency, President Cyril Ramaphosa <\/span><span>Honourable, the Deputy President Paul Mashatile&nbsp;&nbsp;<\/span><\/p>\n<p><span>Cabinet Colleagues&nbsp;&nbsp;<\/span><\/p>\n<p><span>Members of the Executive Council for Finance&nbsp;&nbsp;<\/span><\/p>\n<p><span>Honourable Members&nbsp;&nbsp;<\/span><\/p>\n<p><span>Governor of the South African Reserve Bank&nbsp;&nbsp;<\/span><\/p>\n<p><span>Commissioner of the South African Revenue Service&nbsp;&nbsp;<\/span><\/p>\n<p><span>Fellow South Africans&nbsp;&nbsp;<\/span><\/p>\n<p><span>I have the honour to table the following documents before this House:&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Division of Revenue Bill;&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Appropriation Bill;&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Eskom Debt Relief Amendment Bill;&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Public Sector Pension and Related Payments Bill;&nbsp; The 2025 Revenue Laws Amendment Bill;&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Estimates of National Expenditure;&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Budget Review; and&nbsp;&nbsp;<\/span><\/p>\n<p><span>The 2025 Budget Speech.&nbsp;<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>INTRODUCTION&nbsp;<\/b><\/p>\n<p><span>Madam Speaker,&nbsp;&nbsp;<\/span><\/p>\n<p><span>The postponement of the tabling of the Budget three weeks ago was a regrettable, but&nbsp; perhaps an understandable feature of multiparty governance.&nbsp;&nbsp;<\/span><\/p>\n<p><span>It is a sign of a maturing and resilient democracy.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The delay has stimulated an unprecedented level of public debate about the difficult policy&nbsp; trade-offs we, as a nation, face.&nbsp;&nbsp;<\/span><\/p>\n<p><span>A vital debate about which policies to fund and how to fund them. About which priorities to&nbsp; pursue now, and which ones we may need to delay in the context of our limited resources.&nbsp;&nbsp;<\/span><\/p>\n<p><span>As much as the debate has been dominated by the proposed increase to value-added tax&nbsp; (VAT), the bigger debate must be about how we grow the economy for the benefit of the&nbsp; majority.&nbsp;&nbsp;<\/span><\/p>\n<p><span>A bigger, faster growing economy, and the larger fiscal resources that comes with it, would&nbsp; give us more fiscal room to meet more of our developmental goals.&nbsp;&nbsp;<\/span><\/p>\n<p><span>But the truth is that our economy has stagnated for over a decade. In that time, GDP growth&nbsp; has averaged less than 2 per cent, far below the level required to meet our expanding list of&nbsp; needs.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In 2024, the economy grew by only 0.6 per cent. Over the medium term, GDP growth is&nbsp; projected to average 1.8 per cent.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To meet our goals of redistribution, redress and structural transformation, the economy&nbsp; needs to grow much faster and in an inclusive manner. This is the central objective of the&nbsp; current administration.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Today\u2019s Budget proposes a bold and pragmatic approach to achieving this formidable task.&nbsp;&nbsp;<\/span><\/p>\n<p><span>It calls for macroeconomic stability supported by sound fiscal policy. For the deepening of&nbsp; structural reforms to remove the obstacles to growth and job creation. And for scaling up&nbsp; infrastructure to unlock the productive capacity of the economy, while building a capable&nbsp; state that supports all these efforts.&nbsp;<\/span><\/p>\n<p><span>The Budget remains committed to a balanced fiscal strategy.&nbsp;&nbsp;<\/span><\/p>\n<p><span>As projected in the 2024 Medium Term Budget Policy Statement (MTBPS), a budget primary&nbsp; surplus of 0.5 per cent of GDP will be achieved in 2024\/25, and this will grow to 0.9 per cent&nbsp; in 2025\/26.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Government debt will stabilise, at 76.2 per cent of GDP in 2025\/26, while the consolidated&nbsp; budget deficit also narrows, to 3.5 per cent by 2027\/28.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Madam Speaker as debt stabilises, a growing primary surplus will enable the government to&nbsp; reduce debt-service costs as a proportion of revenue.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Some of those savings will be used to build up fiscal buffers that we need as protection against&nbsp; future economic shocks. Shocks like the COVID-19 pandemic, and other uncertainties&nbsp; stemming from the rising geopolitical tensions and the global economic ramifications thereof.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Debt-service costs will amount to R389.6 billion in the current financial year. This translates&nbsp; to 22 cents of every rand we raise in revenue. It is more than what we spend on health, the&nbsp; police and basic education.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We must reverse this trend and prevent the cost of debt from taking away resources that&nbsp; could otherwise be spent on our pressing social needs, or to invest in growth.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In this regard, our fiscal strategy stabilises debt service costs as a percentage of revenue in&nbsp; 2024\/25 by maintaining a primary budget surplus.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The Eskom debt relief arrangements are also effective and contribute to the improved fiscal&nbsp; position.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Eskom is now in a much better financial position than in 2023 when the debt relief was&nbsp; originally announced.&nbsp;&nbsp;<\/span><\/p>\n<p><span>As a result of these improvements, we have decided to simplify the final phase of the debt&nbsp; relief package.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The last R70 billion debt takeover will now be replaced with R40 billion in 2025\/26, and R10&nbsp; billion in 2028\/29. This will result in a saving for the government of about R20 billion.&nbsp;<\/span><\/p>\n<p><span>Honourable Members, these fiscal improvements are important milestones on our path to&nbsp; fostering a stable macroeconomic environment that is a prerequisite for a higher level of&nbsp; growth that promotes job creation, improves public services and reduces inequality.&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/p>\n<p><b>FOSTERING FASTER INCLUSIVE GROWTH&nbsp;&nbsp;<\/b><\/p>\n<p><b>&nbsp;&nbsp;<\/b><\/p>\n<p><span>Our strategy to achieve faster growth remains anchored on the following four pillars:&nbsp; <\/span><span>\u2022 <\/span><span>Maintaining macroeconomic stability,&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>Implementing structural reforms,&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Improving state capability, and&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Accelerating infrastructure investment.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n<p><span>Maintaining macroeconomic stability, inclusive of prudent fiscal policy, promotes stable&nbsp; prices, lowers interest rates and enhances the country\u2019s resilience to external shocks.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This creates a conducive environment for investment.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Implementing structural reforms removes impediments to growth and creates a solid&nbsp; foundation for a high and sustained economic growth.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Madam Speaker, it was out of the realisation that economic growth and fiscal stability are&nbsp; mutually reinforcing, that Operation Vulindlela was formed as a joint initiative between the&nbsp; Treasury and the Presidency, to fast track the implementation of structural reforms.&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/p>\n<p><span>Its objectives were to:&nbsp;&nbsp;<\/span><\/p>\n<ol>\n<li><span> Stabilise the supply of electricity;&nbsp;&nbsp;<\/span><\/li>\n<li><span> Create a competitive and efficient freight logistics system;&nbsp;&nbsp;<\/span><\/li>\n<li><span> Reduce the cost and improve the quality of digital communication;&nbsp; 4. Ensure a stable, quality supply of water; and&nbsp;&nbsp;<\/span><\/li>\n<li><span> Reform the visa regime to facilitate skilled immigration and support tourism.<\/span><\/li>\n<\/ol>\n<p><span>Since its establishment in 2020, OV has made real progress in achieving these objectives.&nbsp;&nbsp;<\/span><\/p>\n<p><span>For example:&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>The energy reforms have created a 22 500 mega-watt pipeline of projects. More than&nbsp; 10 000 mega-watts are formally registered with the NERSA, which is one of the last steps&nbsp; in the regulatory process. These projects will contribute to reducing power cuts.&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The Freight Logistics Roadmap was approved. The roadmap allows private sector&nbsp; participation and gives third-party access to any operator without discrimination in&nbsp; accordance with the network statement.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The cost of a 1.5GB data bundle has declined by 51 per cent, allowing individuals and&nbsp; small businesses to access more affordable data.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The water-use licenses backlog has been cleared, unlocking billions in investment and&nbsp; freeing projects that had stalled because of the backlog.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The water quality regulatory system was reinstated for the first time since 2014. This is&nbsp; the Green Drop, Blue Drop and No Drop certification that enables effective intervention&nbsp; in supporting failing municipalities to provide clean water to citizens.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>e-Visas for travellers from 34 countries have been introduced to significantly boost&nbsp; tourism. The trusted employer scheme has been established to fast-track visa process&nbsp; for major investors.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n<p><span>These achievements have eased economic bottlenecks. And building on the successes, Phase&nbsp; 2 of OV will focus on:&nbsp;&nbsp;<\/span><\/p>\n<p><span>\u2022 Following through on existing reforms in energy, water, logistics and visa systems;&nbsp; \u2022 Strengthening local government and improving the delivery of basic services;&nbsp; \u2022 Harnessing digital public infrastructure as a driver of growth and inclusion; and&nbsp; \u2022 Creating efficient, productive and inclusive cities.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>INFRASTRUCTURE&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, infrastructure is a key pillar of our growth strategy.&nbsp;&nbsp;<\/span><\/p>\n<p><span>It is the bedrock for economic development, a key source of jobs, and an avenue to scale-up&nbsp; service delivery.&nbsp;&nbsp;<\/span><\/p>\n<p><b>INFRASTRUCTURE SPENDING&nbsp;&nbsp;<\/b><\/p>\n<p><span>This budget reflects that understanding. Allocations towards capital payments are the fastest growing area of spending by economic classification.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Public infrastructure spending over the next three years will amount to more than R1 trillion.&nbsp; The spending will focus on three sectors:&nbsp;&nbsp;<\/span><\/p>\n<p><span>&#8211; <\/span><span>R402 billion for transport and logistics,&nbsp;&nbsp;<\/span><\/p>\n<p><span>&#8211; <\/span><span>R219.2 billion for energy infrastructure, and&nbsp;&nbsp;<\/span><\/p>\n<p><span>&#8211; <\/span><span>R156.3 billion for water and sanitation.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In transport, the South African National Roads Agency (SANRAL) will spend R100 billion over&nbsp; the medium term to keep the national road network in good condition.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Provincial roads departments will reseal over 16,000 lane-kilometres of roads in their areas&nbsp; of authority.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The Passenger Rail Agency of South Africa (PRASA) is making steady progress to rebuild&nbsp; infrastructure to provide affordable commuter rail services.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To sustain this progress, we have provisionally allocated an additional R19.2 billion over the&nbsp; medium term for critical signalling upgrades.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This will enable commuters from areas like Mamelodi, Kwa-Mashu, Motherwell and&nbsp; Khayelitsha to catch a train every 10 minutes, to get to and from work and significantly reduce&nbsp; the money that low-income households spend on transport.&nbsp;<\/span><\/p>\n<p><span>The allocation will also allow PRASA to maximise the potential of the 241 new trains delivered&nbsp; through the rolling stock renewal programme.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Despite the progress made, PRASA\u2019s procurement system needs strengthening.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The management of the entity have already instituting measures to strengthen their&nbsp; procurement weaknesses. This includes getting support from the National Treasury to build&nbsp; capacity and mitigate risks and undertaking live audits for large procurement projects.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In water, we are investing in several large-scale dam projects that are ramping up or entering&nbsp; construction.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The Mkhomazi Project is expected to commence construction in November 2027, transferring&nbsp; water to the Mngeni Water Supply System. This will increase the total capacity of the system&nbsp; to 5 million households in eThekwini and 4 district municipalities in KwaZulu Natal.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The Berg River-Vo\u00eblvlei Augmentation Scheme is expected to start in July 2026. The project&nbsp; will improve the Western Cape\u2019s Water Supply System, improving regional water security&nbsp; while reliably supplying domestic, agricultural and industrial water users.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To further accelerate infrastructure delivery and effectiveness, we are continuing reforms to&nbsp; facilitate greater private sector participation, capital budgeting reform and alternative&nbsp; infrastructure financing.&nbsp;&nbsp;<\/span><\/p>\n<p><b>PUBLIC-PRIVATE PARTNERSHIPS&nbsp;&nbsp;<\/b><\/p>\n<p><span>The new regulations for public-private partnerships (PPPs) have been finalised and will take&nbsp; effect on 1 June 2025.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The regulations reduce the procedural complexity of undertaking PPPs, create capacity to&nbsp; support and manage PPPs, create clear rules for managing unsolicited bids, and strengthen&nbsp; fiscal risk governance.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The regulations also make provision for national departments to establish sector-specific PPP&nbsp; units. These units will drive private sector participation (PSP), creating opportunities to&nbsp; optimise the balance sheets of financially distressed state-owned companies.<\/span><\/p>\n<p><span>The Department of Transport and Transnet will engage the market on PSP projects in the&nbsp; following areas:&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>The ore, chrome, coal and manganese lines.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Expansion and automation of the ferrochrome and magnetite terminal at the port of&nbsp; Richards Bay.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The container and automotive sectors, including the potential designation of the SA&nbsp; container port system as a regional trans-shipment hub for major shipping lines.&nbsp; <\/span><span>\u2022 <\/span><span>And establishment of independent rolling stock leasing company.&nbsp;<\/span><\/li>\n<\/ul>\n<p><span>Should Transnet require gap funding for its PSP projects, the Budget Facility for Infrastructure&nbsp; (BFI) will consider these after proper packaging and financial structuring.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Additional guarantees may also be considered to refinance the entity\u2019s maturing debt as well&nbsp; as its capital investment programme.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In the energy sector, the Independent Transmission Programme will be launched later this&nbsp; year.&nbsp;&nbsp;<\/span><\/p>\n<p><span>A request for information for a multi-line transmission package will also be issued by the&nbsp; Independent Power Producers Office in July this year, followed by a request for proposals in&nbsp; November.&nbsp;&nbsp;<\/span><\/p>\n<p><span>These will enable the private sector to play a key role in the expansion of the transmission&nbsp; network.&nbsp;&nbsp;<\/span><\/p>\n<p><b>BUDGET FACILITY FOR INFRASTRUCTURE&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, we have reconfigured the BFI to run multiple bid windows instead of just&nbsp; one annual window.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Earlier this week, we published a call for proposals under the new system.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The first window is now open and will close mid-April. The next window will open soon&nbsp; thereafter. <\/span><\/p>\n<p><span>Financing decisions to determine the appropriate fiscal mechanism to support projects have&nbsp; also been separated from the evaluation and budget processes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This will facilitate the mobilising of significant private finance and improve allocative&nbsp; efficiency in fiscal support.&nbsp;&nbsp;<\/span><\/p>\n<p><b>ALTERNATIVE FINANCING ARRANGEMENTS&nbsp;&nbsp;<\/b><\/p>\n<p><span>Lastly, our efforts to diversify the financing strategy to support infrastructure are taking&nbsp; shape.&nbsp;&nbsp;<\/span><\/p>\n<p><span>A credit guarantee vehicle to mobilize private sector capital by derisking projects, will be&nbsp; launched in 2026. Its initial focus will be on independent transmission aimed at bridging the&nbsp; energy transmission deficit. Once the vehicle has demonstrated its efficacy, it will be&nbsp; broadened to include other sectors.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Government will issue its first infrastructure bond in 2025\/26. We will also introduce other&nbsp; innovative financing instruments to diversify the infrastructure funding sources. Financial&nbsp; institutions including pension funds, banks, development banks and international financial&nbsp; institutions have already expressed interest in participating.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This, Madam Speaker, is how we plan to leverage infrastructure investment to ease supply&nbsp; side constraints to the economy and improve the quality of public services the people get.&nbsp;&nbsp;<\/span><\/p>\n<p><b>REVENUE AND TAX PROPOSALS&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker,&nbsp;&nbsp;<\/span><\/p>\n<p><span>There are several persistent spending pressures in health, education, transport and security.&nbsp; These have to do with the government properly fulfilling its service delivery mandate.&nbsp;&nbsp;<\/span><\/p>\n<p><span>After careful consideration, the government has decided to fund these. Deferring the funding&nbsp; of these sectors further would compromise the government\u2019s ability to meet its constitutional&nbsp; obligations to the people.&nbsp;<\/span><\/p>\n<p><span>To raise the revenue needed, the government proposes to increase the VAT rate by half- a percentage point in 2025\/26, and by another half-a-percentage point in the following year.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This will bring the VAT rate to 16 per cent in 2026\/27.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Government also proposes no inflationary adjustments to personal income tax brackets,&nbsp; rebates and medical tax credits.&nbsp;&nbsp;<\/span><\/p>\n<p><span>These measures will raise R28 billion in additional revenue in 2025\/26 and R14.5 billion in&nbsp; 2026\/27.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Madam Speaker, this decision was not made lightly. No Minister of Finance is ever happy to&nbsp; increase taxes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We are aware of the fact that a lower overall burden of tax can help to increase investment&nbsp; and job creation and also unlock household spending power.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We have, however, had to balance this knowledge against the very real, and pressing, service&nbsp; delivery needs that are vital to our developmental goals and which cannot be further&nbsp; postponed.&nbsp;&nbsp;<\/span><\/p>\n<p><b>OPTING FOR VAT&nbsp;&nbsp;<\/b><\/p>\n<p><span>Honourable Members, we thoroughly examined alternatives to raising the VAT rate. We&nbsp; weighed up the policy trade-offs involved, including increases to corporate and personal&nbsp; income taxes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Increasing corporate or personal income tax rates would generate less revenue, while&nbsp; potentially harming investment, job creation and economic growth.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Corporate tax collections have declined over the last few years, an indication of falling profits&nbsp; and a trading environment worsened by the logistics constraints and rising electricity costs.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Furthermore, South Africa\u2019s corporate income tax collections are already higher than most of&nbsp; our peer countries.&nbsp;&nbsp;<\/span><\/p>\n<p><span>On the other hand, an increase to the personal income tax rate would reduce taxpayers\u2019&nbsp; incentives to work and save.&nbsp;<\/span><\/p>\n<p><span>Our top personal income tax rate and our personal income tax collections as a percentage of&nbsp; GDP are far higher than those of most developing countries. Increasing it is therefore not&nbsp; feasible.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Taking on additional debt to meet the spending pressures was also not feasible. The amount&nbsp; is simply too large. The cost of borrowing would be unaffordable. Our sub-investment credit&nbsp; rating would also make this level of borrowing costlier and put us at risk of even further&nbsp; downgrades.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Madam Speaker, VAT is a tax that affects everyone. By opting for a marginal increase to VAT,&nbsp; its distributional effect and impact were cautiously considered.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The increase is also the most effective way to avoid further spending cuts and to enable us&nbsp; extend the social wage.&nbsp;&nbsp;<\/span><\/p>\n<p><b>CUSHIONING HOUSEHOLDS&nbsp;&nbsp;<\/b><\/p>\n<p><span>The government is very aware of the cost-of-living pressures faced by households, including&nbsp; high food and fuel prices and rising electricity and transportation costs.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This is why we are taking concrete steps to protect vulnerable households.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The is done through:&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>Providing social grant increases that are above inflation.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Expanding the basket of VAT zero-rated food items to include canned vegetables, dairy&nbsp; liquid blends, and organ meats from sheep, poultry and other animals.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>We are also not increasing the fuel levy for another year, saving consumers around R4&nbsp; billion.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n<p><b>RESOURCING SARS&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, broadening the tax base and improving the administrative efficiency of the&nbsp; South African Revenue Service, allows us over time, to spread the tax burden more evenly&nbsp; and equitably.&nbsp;&nbsp;<\/span><\/p>\n<p><span>With this in mind, SARS is allocated R3.5 billion in the current financial year and an additional&nbsp; R4 billion over the medium term.&nbsp;<\/span><\/p>\n<p><span>By the end of February this year, SARS reported a significant increase in undisputed debt. This&nbsp; means billions of Rands are owed to the State.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The revenue collector has also detected 156 000 taxpayers who are not registered or have&nbsp; not filed despite their substantial economic activity.&nbsp;&nbsp;<\/span><\/p>\n<p><span>I call on all South Africans to comply with the law and support SARS in its endeavour to collect&nbsp; the revenues that enable government to fund and provide critical services.&nbsp;&nbsp;<\/span><\/p>\n<p><span>I also want to emphasise the importance of tax compliance.&nbsp;&nbsp;<\/span><\/p>\n<p><span>I thank all compliant taxpayers who pay their fair share of taxes. I also encourage those that&nbsp; are not compliant to do the right thing.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The rewards of higher tax compliance and efficiency take time. Once again, the investments&nbsp; we make today in SARS will allow the collector the time to make improvements.&nbsp;&nbsp;<\/span><\/p>\n<p><b>SPENDING PRIORITIES AND THE DIVISION OF REVENUE&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, the revenue proposed through the tax measures announced in this Budget&nbsp; will contribute largely to us providing R232.6 billion in additional funding to key programmes&nbsp; over the medium term.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This amounts to R102 billion in 2025\/26, R68 billion in 2026\/27, and R62 billion in 2027\/28.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The funding is for spending pressures for infrastructure investments, social protection, a&nbsp; higher-than-anticipated public-service wage agreement, and provisional allocations for&nbsp; critical frontline services.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Honourable members, in the last year alone public sector health system lost close to 9,000&nbsp; health workers. We did not have the money to retain or replace them even after reprioritising&nbsp; funds budgeted for consumables and medicines.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Accruals in the sector, which is the money owed by departments to vendors for services&nbsp; already provided, also ballooned to nearly R22 billion.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This means that the money allocated to departments ends up paying for previous services&nbsp; and goods rather than for the current needs, setting off a vicious cycle of budget shortfalls,&nbsp; unpaid invoices, and a crisis in cashflow and the planning and predictability of budgets.&nbsp;&nbsp;&nbsp;<\/span><\/p>\n<p><span>This is an untenable situation that we could not leave unresolved.&nbsp;&nbsp;<\/span><\/p>\n<p><span>As a result, consolidated spending, which excludes interest payments, increases from R2.4&nbsp; trillion in 2024\/25 to R2.83 trillion in 2027\/28.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Provinces will receive R2.4 trillion over the MTEF period. This budget includes additional&nbsp; allocations to support critical provincial functions related to health and education.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We trust that the allocations will be used for their intended purposes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The local government equitable share will increase from R99.5 billion in 2024\/25 to R115.7&nbsp; billion in 2027\/28. This is to fund increases in the cost of bulk water and electricity costs&nbsp; provided for free to needy households.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In 2025\/26, 83 per cent of the local government equitable share provides a free basic services&nbsp; package of R610 per month to 11.2 million poor households.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Honourable Members, this package of free municipal services continues to be a key tool for&nbsp; reducing poverty and inequality, raising living standards and facilitating access to greater&nbsp; economic opportunities.&nbsp;&nbsp;<\/span><\/p>\n<p><b>PUBLIC SECTOR PERSONNEL AND WAGES&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, a three-year wage agreement has been reached. Although the agreement&nbsp; exceeds the 2024 Budget and MTBPS projections, its duration reduces uncertainty in budget&nbsp; planning.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This agreement will cost an additional R7.3 billion in 2025\/26, R7.8 billion in 2026\/27 and R8.2&nbsp; billion in 2027\/28.&nbsp;&nbsp;<\/span><\/p>\n<p><span>&nbsp;&nbsp;<\/span><\/p>\n<p><span>An amount of R11 billion is provisionally allocated over the next two fiscal years for the early&nbsp; retirement initiative, whose intention is to attract younger employees into the public service.&nbsp; Preliminary savings are expected to average R7.1 billion per year over the medium-to-long&nbsp; term. The savings will be retained by departments.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The interventions on the wage bill are aimed at ensuring that when key frontline staff are lost&nbsp; through natural attrition and retirement, sectors are able to fill vacant posts to keep services&nbsp; running effectively. <\/span><\/p>\n<p><b>EARLY CHILDHOOD DEVELOPMENT AND BASIC EDUCATION&nbsp;&nbsp;<\/b><\/p>\n<p><span>Paying salaries constitute 76 per cent of provincial education budgets. This means that only&nbsp; R24 out of every R100 of their budget is left for funding school infrastructure, meals for&nbsp; learners from poor backgrounds, and stationery and textbooks, amongst others.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Our learner-teacher ratios remain higher than we would like, meaning that we still need more&nbsp; teachers in classrooms.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To prevent compensation of employees from crowding out other equally important areas of&nbsp; spending, R19.1 billion is added over the medium term to keep approximately 11 000&nbsp; teachers in classrooms.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The foundation to building the next generation of citizens who contribute economically and&nbsp; socially to this great nation is early childhood development.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Despite this, the subsidy for ECD has not increased from the 2019 level of R17 per day, per&nbsp; child.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To remedy this, an additional R10 billion over the medium term is allocated to increase the&nbsp; subsidy to R24 per day per child. The extra funding will also support increased access to ECD&nbsp; for approximately 700 000 more children, up to the age of four years old.&nbsp;&nbsp;<\/span><\/p>\n<p><b>HEALTH&nbsp;&nbsp;<\/b><\/p>\n<p><span>Health spending will grow from R277 billion in 2024\/25 to R329 billion in 2027\/28 to support&nbsp; the equitable provision of public health services, including free primary healthcare.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Like in provincial education, a significant portion of the provincial health budget is spent on&nbsp; the salaries and wages.&nbsp;&nbsp;<\/span><\/p>\n<p><span>R28.9 billion is added to the health budget, mainly to keep about 9 300 healthcare workers in&nbsp; our hospitals and clinics.&nbsp;&nbsp;<\/span><\/p>\n<p><span>It will also be used to employ 800 post-community service doctors, and to ensure that our&nbsp; pharmacies do not run out of medicines. <\/span><\/p>\n<p><b>SOCIAL SECURITY&nbsp;&nbsp;<\/b><\/p>\n<p><span>Honourable Members, social grants are allocated R284.7 billion in 2025\/26. This allows us to&nbsp; increase:&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>The old age and disability grants by R130 to R2 315 in April.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The Child Support Grant by R30 to R560 per month.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The foster care grant by R70.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n<p><span>The COVID19 Social Relief of Distress (SRD), in its current form, will be extended by a year to&nbsp; end March 2026. R35.2 billion is allocated for this purpose.&nbsp;&nbsp;<\/span><\/p>\n<p><span>As announced by the President in the State of the Nation Address, the SRD will be used as a&nbsp; basis for the introduction of a sustainable form of income support for unemployed people.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The future form and nature of the SRD will be informed by the outcome of the review of active&nbsp; labour market programmes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This is expected to be completed by September 2025.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Madam Speaker, nearly 28 million beneficiaries will access social grants.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The truth is that ours is one of the most comprehensive social safety nets among emerging&nbsp; economies. This reflects our commitment to addressing poverty and inequality, while keeping&nbsp; our spending sustainable.&nbsp;&nbsp;<\/span><\/p>\n<p><b>PEACE AND SECURITY&nbsp;&nbsp;<\/b><\/p>\n<p><span>In this budget, we have also made a provision to replenish funding for our security functions&nbsp; and peace-keeping commitments.&nbsp;&nbsp;<\/span><\/p>\n<p><span>R9.4 billion is allocated to fund the defence force and correctional services.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Over the medium term, R5 billion has been allocated to the Department of Defence to support&nbsp; South Africa\u2019s participation in the Southern African Development Community (SADC) mission&nbsp; in the Democratic Republic of the Congo and to supplement existing peace keeping activities.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We will continue working with the Department of Defence on ways to change the&nbsp; composition of expenditure to modernise the defence force.&nbsp;<\/span><\/p>\n<p><span>Madam Speaker, combating financial crimes and corruption is essential to protecting the&nbsp; integrity of our economy and the institutions that foster stability and social wellbeing.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Funds are allocated for enhancing the financial forensic and accounting capabilities in our law&nbsp; enforcement institutions, to further strengthen our ability to detect and prosecute complex&nbsp; economic crimes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>These efforts address recommendations from the Financial Action Task Force and the State&nbsp; Capture Commission, ensuring that we continue to fight money laundering and the financing&nbsp; of terrorism with urgency and precision.&nbsp;&nbsp;<\/span><\/p>\n<p><span>There are remaining issues that require work during the year which may require funding later&nbsp; this year. These includes:&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>Infrastructure projects in the BFI and the rolling stock fleet renewal programme;&nbsp; <\/span><span>\u2022 <\/span><span>Accommodating population changes that impact on the provincial equitable share&nbsp; allocations;&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Strengthening capabilities in the Office of the Chief Justice, Statistics South Africa and&nbsp; the South African Revenue Service; and&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Political party funding and infrastructure provision for royal houses.&nbsp; <\/span><b>BUILDING STATE CAPABILITY&nbsp;&nbsp;<\/b><\/li>\n<\/ul>\n<p><span>Madam Speaker, our ability to deliver quality public services depends on having a competent,&nbsp; capable and ethical state.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Delivering reliable and sustainable core services is a priority for this government.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Our focus must remain on more effective and efficient service delivery, and a proper&nbsp; combination between personnel expenditure, operating costs and the maintenance of&nbsp; physical facilities and assets, supported by professional and efficient administration.&nbsp;<\/span><\/p>\n<p><b>BUDGET REFORMS&nbsp;&nbsp;<\/b><\/p>\n<p><span>For over a decade, budgets have been trimmed across the board.&nbsp;&nbsp;<\/span><\/p>\n<p><span>While these measures have helped maintain fiscal discipline, they have often been&nbsp; implemented without a thorough interrogation of whether the funds we allocate truly&nbsp; support our national priorities.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We must acknowledge that over time budgets tend to grow incrementally, often carrying&nbsp; forward historical allocations, without necessarily reflecting the evolving needs of our&nbsp; country.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This approach has led to inefficiencies, misalignments, duplications and, in some cases, the&nbsp; continued funding of programmes that do not yield the intended impact.&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/p>\n<p><span>We recognise the urgent need to address this. We are not deaf to the public\u2019s concern about&nbsp; wasteful and inefficient expenditure.&nbsp;&nbsp;<\/span><\/p>\n<p><span>We know that we must earn the taxpayer\u2019s trust every day, by spending public money with&nbsp; care and ensuring that every rand collected is spent on its intended purpose.&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/p>\n<p><span>Since 2013, as part of the ongoing revaluation of the operations of government, the National&nbsp; Treasury and provincial treasuries have undertaken 240 spending reviews.&nbsp;&nbsp;<\/span><\/p>\n<p><span>These reviews range from examining efficiencies in administrative functions, like office&nbsp; accommodation, fleet management and overtime pay in various sectors, to measuring the&nbsp; effectiveness of service delivery programmes in health, education and human settlements.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The consolidated recommendations of these reviews will be taken to Cabinet in the next&nbsp; month.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The President has also undertaken to establish a committee between the Presidency and&nbsp; Treasury to identify waste, inefficient and underperforming programmes. Thank you for this&nbsp; commitment, Mr President!&nbsp;&nbsp;<\/span><\/p>\n<p><span>As the National Treasury, we are ready to take the lead to improve the effectiveness and&nbsp; efficiency of spending. We will:&nbsp;<\/span><\/p>\n<ul>\n<li><span> <\/span><span>Undertake an audit of ghost workers, starting with national and provincial departments.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>Use the ongoing, detailed review of labour market activation programmes and public&nbsp; employment programmes to consolidate and rationalise the entire public employment&nbsp; ecosystem. The aim of the review is to reduce duplication and improve operational&nbsp; efficiencies across the more than 100 active labour market programmes in over 20&nbsp; public institutions. The recommendations of this review will be presented to Cabinet in&nbsp; due course.&nbsp;&nbsp;<\/span><\/li>\n<li><span> <\/span><span>The Treasury will implement significant changes to the budget process by reassessing&nbsp; the initial assumptions informing budget allocations, with a view to creating room for&nbsp; improved spending.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n<p><span>Madam Speaker, these reviews go beyond mere cost-cutting measures.&nbsp;&nbsp;<\/span><\/p>\n<p><span>They allow us to systematically assess whether public expenditure is effectively aligned with&nbsp; the priorities of this government, and whether it delivers the best possible value for money&nbsp; and impact for the people of South Africa while keeping us on the path of fiscal sustainability.&nbsp;&nbsp;<\/span><\/p>\n<p><span>These initiatives will give impetus to the slow implementation of the recommendations of&nbsp; spending review.&nbsp;&nbsp;<\/span><\/p>\n<p><span>I call on Ministers, MECs, DGs, HoDs and every official responsible for public funds, to&nbsp; embrace these efforts and play their part.&nbsp;&nbsp;<\/span><\/p>\n<p><b>IMPLEMENTING THE CONDITIONAL GRANT REVIEW&nbsp;&nbsp;<\/b><\/p>\n<p><span>The proliferation of conditional grants has necessitated a review of conditional grants to&nbsp; reduce duplication and improve the effectiveness of programmes.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This budget will implement the first phase of the recommendations of the review and includes&nbsp; merging conditional grants in basic education and agriculture.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Performance based conditional grants to metropolitan municipalities are also introduced,&nbsp; linked to institutional, governance and financial reforms to improve services.&nbsp;<\/span><\/p>\n<p><b>BUILDING DISASTER RESILIENCE&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, the incentives in our current disaster management system are skewed&nbsp; towards relief and rehabilitation, when mitigation and readiness to minimise damage is the&nbsp; most cost effective response.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Our municipalities stand at the frontline of disaster response yet they are hamstrung by aging&nbsp; infrastructure, bureaucratic fragmentation, and limited access to emergency funds.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The priority is to reduce the administrative burden to access emergency funds. Every hour of&nbsp; delay costs lives and livelihoods.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Continuous improvements are made to the grant system to incentivise municipalities to&nbsp; access a variety of funding instruments for disasters. These include their own budget, the&nbsp; contingency reserve, conditional grant funding and insurance.&nbsp;&nbsp;<\/span><\/p>\n<p><span>The Budget allocates R1.7 billion to respond to future disasters over the medium term, while&nbsp; R4 billion is provisionally allocated to address backlogs in recovery efforts for provinces and&nbsp; municipalities.&nbsp;&nbsp;<\/span><\/p>\n<p><b>STRENGTHENING LOCAL GOVERNMENT&nbsp;&nbsp;<\/b><\/p>\n<p><span>The decline in municipal services is evident across cities, towns and rural villages highlighting&nbsp; the systemic challenges faced by this varying group of municipalities.&nbsp;&nbsp;<\/span><\/p>\n<p><span>As outlined by the President in his State of the Nation Address, phase 2 of Operation&nbsp; Vulindlela, the institutional structure of local government will be reviewed through the&nbsp; updating of the white paper of local government.&nbsp;&nbsp;<\/span><\/p>\n<p><span>In line with the constitutional principle of funds follow function, the review of the local&nbsp; government fiscal framework will examine how to appropriately finance local government,&nbsp; relative to their functions and their form.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Reforms to the revenue generating services of local government, namely water and&nbsp; sanitation, electricity and refuse removal are underway.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Six of the eight metropolitan municipalities have met the minimum requirements to&nbsp; participate in the financial performance incentive grant, the Urban Development Financing&nbsp; Grant.&nbsp;<\/span><\/p>\n<p><span>Further allocations in the programme are dependent on municipalities meeting specific&nbsp; targets related set out in their performance improvement action plans.&nbsp;&nbsp;<\/span><\/p>\n<p><span>For 2025\/26, this includes critical institutional, governance and management changes to&nbsp; create an enabling environment for long term investment in infrastructure.&nbsp;&nbsp;<\/span><\/p>\n<p><span>By ring-fencing the revenues from these services, and running operating surpluses, these&nbsp; business units can generate funds for infrastructure improvements to deliver quality and&nbsp; reliable services.&nbsp;&nbsp;<\/span><\/p>\n<p><b>CONCLUSION&nbsp;&nbsp;<\/b><\/p>\n<p><span>Madam Speaker, in conclusion, allow me to reiterate that through the policy choices we have&nbsp; made and the carefully targeted allocations we are proposing, public institutions should be in&nbsp; a better position to continue delivering much needed services to the people.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This budget reflects our collective efforts to chart a path through difficult times to prosperity.&nbsp;&nbsp;<\/span><\/p>\n<p><span>It represents a vision of the future and a realistic assessment of the present, as well as the&nbsp; options available to us right now.&nbsp;&nbsp;<\/span><\/p>\n<p><span>This vision can only be achieved by making difficult but considered policy choices, choices that&nbsp; weigh up the trade-offs and commit to a way forward.&nbsp;&nbsp;<\/span><\/p>\n<p><span>&nbsp;&nbsp;<\/span><\/p>\n<p><span>Honourable Members, this budget is the product of the combined and careful consideration&nbsp; of the Cabinet of the Government of National Unity, that has done the difficult and necessary&nbsp; work of assessing the alternatives open to us at the current juncture in our growth journey.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Honourable Members, this budget is also a proposal to you as the Parliament that has been&nbsp; democratically elected to represent the aspirations and interests of all South Africans by&nbsp; confronting the difficult choices needed to move our country forward.&nbsp;&nbsp;<\/span><\/p>\n<p><span>It is in this spirit that I draw on the words of the pan-African leader, Amilcar Cabral, who&nbsp; advised us to:&nbsp;&nbsp;<\/span><\/p>\n<p><i><span>\u201cAlways bear in mind that the people are not fighting for ideas, for the things in anyone&#8217;s&nbsp; head.&nbsp;<\/span><\/i><\/p>\n<p><i><span>They are fighting to win material benefits, to live better and in peace, to see their lives go&nbsp; forward, to guarantee the future of their children.\u201d&nbsp;&nbsp;<\/span><\/i><\/p>\n<p><span>The policy choices proposed here are about achieving these material benefits. They are about&nbsp; moving South Africa and all South Africans forward into a better, more prosperous and&nbsp; equitable future.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Speaker, as I close, allow me to express my deepest gratitude to the President and Deputy&nbsp; President for their counsel, their support and for their leadership.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Thank you also to the Deputy Ministers of Finance and the excellent National Treasury team&nbsp; led by the Director-General.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Thank you to the Commissioner of the South African Revenue Service and the Governor of&nbsp; the South African Reserve Bank, for their astute stewardship of these two key institutions.&nbsp;&nbsp;<\/span><\/p>\n<p><span>Thank you to my Cabinet colleagues, the Ministers\u2019 Committee on the Budget, and the Budget&nbsp; Council, who share the heavy load of the tough decisions that we must make to maintain&nbsp; the sustainability of our public finances.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To the Parliamentary Committees of Finance, Appropriations and Public Accounts, I express&nbsp; my sincere appreciation.&nbsp;&nbsp;<\/span><\/p>\n<p><span>To my dear wife and family, your care, understanding and support is a constant source of&nbsp; strength and inspiration. Thank you.&nbsp;&nbsp;<\/span><\/p>\n<p><span>&nbsp;&nbsp;<\/span><\/p>\n<p><span>Lastly, thank you to South African people who continue to entrust their aspirations to us.&nbsp; <\/span><\/p>\n<p><strong>BUSINESS REPORT&nbsp;<\/strong><\/p>\n<figure><img decoding=\"async\" class=\"baobab-embedded-image\" src=\"https:\/\/www.premium-partners.net\/wp-content\/uploads\/2025\/03\/650x65000-2\" loading=\"lazy\" width=\"650\" \/><figcaption>BR Budget Logo.<\/figcaption><\/figure>","protected":false},"excerpt":{"rendered":"<p>\u00a0Honourable Speaker, Thoko Didiza\u00a0\u00a0Deputy Speaker, Annelie Lotriet\u00a0\u00a0Chairperson of the National Council of Provinces, Refiloe Mtshweni-Tsipane\u00a0 Deputy Chairperson of the National Council of Provinces, Les Govender\u00a0 His Excellency, President Cyril Ramaphosa Honourable, the Deputy President Paul Mashatile\u00a0\u00a0Cabinet Colleagues\u00a0\u00a0Members of the Executive Council for Finance\u00a0\u00a0Honourable Members\u00a0\u00a0Governor of the South African Reserve Bank\u00a0\u00a0Commissioner of the South African Revenue Service\u00a0\u00a0Fellow South Africans\u00a0\u00a0I have the honour to table the following documents before this House:\u00a0\u00a0The 2025 Division of Revenue Bill;\u00a0\u00a0The 2025 Appropriation Bill;\u00a0\u00a0The 2025 Eskom Debt Relief Amendment Bill;\u00a0\u00a0The 2025 Public Sector Pension and Related Payments Bill;\u00a0 The 2025 Revenue Laws Amendment Bill;\u00a0\u00a0The 2025 Estimates of National Expenditure;\u00a0\u00a0The 2025 Budget Review; and\u00a0\u00a0The 2025 Budget Speech.\u00a0\u00a0INTRODUCTION\u00a0Madam Speaker,\u00a0\u00a0The postponement of the tabling of the Budget three weeks ago was a regrettable, but\u00a0 perhaps an understandable feature of multiparty governance.\u00a0\u00a0It is a sign of a maturing and resilient democracy.\u00a0\u00a0The delay has stimulated an unprecedented level of public debate about the difficult policy\u00a0 trade-offs we, as a nation, face.\u00a0\u00a0A vital debate about which policies to fund and how to fund them. About which priorities to\u00a0 pursue now, and which ones we may need to delay in the context of our limited resources.\u00a0\u00a0As much as the debate has been dominated by the proposed increase to value-added tax\u00a0 (VAT), the bigger debate must be about how we grow the economy for the benefit of the\u00a0 majority.\u00a0\u00a0A bigger, faster growing economy, and the larger fiscal resources that comes with it, would\u00a0 give us more fiscal room to meet more of our developmental goals.\u00a0\u00a0But the truth is that our economy has stagnated for over a decade. In that time, GDP growth\u00a0 has averaged less than 2 per cent, far below the level required to meet our expanding list of\u00a0 needs.\u00a0\u00a0In 2024, the economy grew by only 0.6 per cent. Over the medium term, GDP growth is\u00a0 projected to average 1.8 per cent.\u00a0\u00a0To meet our goals of redistribution, redress and structural transformation, the economy\u00a0 needs to grow much faster and in an inclusive manner. This is the central objective of the\u00a0 current administration.\u00a0\u00a0Today\u2019s Budget proposes a bold and pragmatic approach to achieving this formidable task.\u00a0\u00a0It calls for macroeconomic stability supported by sound fiscal policy. For the deepening of\u00a0 structural reforms to remove the obstacles to growth and job creation. And for scaling up\u00a0 infrastructure to unlock the productive capacity of the economy, while building a capable\u00a0 state that supports all these efforts.\u00a0The Budget remains committed to a balanced fiscal strategy.\u00a0\u00a0As projected in the 2024 Medium Term Budget Policy Statement (MTBPS), a budget primary\u00a0 surplus of 0.5 per cent of GDP will be achieved in 2024\/25, and this will grow to 0.9 per cent\u00a0 in 2025\/26.\u00a0\u00a0Government debt will stabilise, at 76.2 per cent of GDP in 2025\/26, while the consolidated\u00a0 budget deficit also narrows, to 3.5 per cent by 2027\/28.\u00a0\u00a0Madam Speaker as debt stabilises, a growing primary surplus will enable the government to\u00a0 reduce debt-service costs as a proportion of revenue.\u00a0\u00a0Some of those savings will be used to build up fiscal buffers that we need as protection against\u00a0 future economic shocks. Shocks like the COVID-19 pandemic, and other uncertainties\u00a0 stemming from the rising geopolitical tensions and the global economic ramifications thereof.\u00a0\u00a0Debt-service costs will amount to R389.6 billion in the current financial year. This translates\u00a0 to 22 cents of every rand we raise in revenue. It is more than what we spend on health, the\u00a0 police and basic education.\u00a0\u00a0We must reverse this trend and prevent the cost of debt from taking away resources that\u00a0 could otherwise be spent on our pressing social needs, or to invest in growth.\u00a0\u00a0In this regard, our fiscal strategy stabilises debt service costs as a percentage of revenue in\u00a0 2024\/25 by maintaining a primary budget surplus.\u00a0\u00a0The Eskom debt relief arrangements are also effective and contribute to the improved fiscal\u00a0 position.\u00a0\u00a0Eskom is now in a much better financial position than in 2023 when the debt relief was\u00a0 originally announced.\u00a0\u00a0As a result of these improvements, we have decided to simplify the final phase of the debt\u00a0 relief package.\u00a0\u00a0The last R70 billion debt takeover will now be replaced with R40 billion in 2025\/26, and R10\u00a0 billion in 2028\/29. This will result in a saving for the government of about R20 billion.\u00a0Honourable Members, these fiscal improvements are important milestones on our path to\u00a0 fostering a stable macroeconomic environment that is a prerequisite for a higher level of\u00a0 growth that promotes job creation, improves public services and reduces inequality.\u00a0\u00a0\u00a0\u00a0FOSTERING FASTER INCLUSIVE GROWTH\u00a0\u00a0\u00a0\u00a0Our strategy to achieve faster growth remains anchored on the following four pillars:\u00a0 \u2022 Maintaining macroeconomic stability,\u00a0\u00a0 Implementing structural reforms,\u00a0\u00a0 Improving state capability, and\u00a0\u00a0 Accelerating infrastructure investment.\u00a0\u00a0Maintaining macroeconomic stability, inclusive of prudent fiscal policy, promotes stable\u00a0 prices, lowers interest rates and enhances the country\u2019s resilience to external shocks.\u00a0\u00a0This creates a conducive environment for investment.\u00a0\u00a0Implementing structural reforms removes impediments to growth and creates a solid\u00a0 foundation for a high and sustained economic growth.\u00a0\u00a0Madam Speaker, it was out of the realisation that economic growth and fiscal stability are\u00a0 mutually reinforcing, that Operation Vulindlela was formed as a joint initiative between the\u00a0 Treasury and the Presidency, to fast track the implementation of structural reforms.\u00a0\u00a0\u00a0\u00a0Its objectives were to:\u00a0\u00a0 Stabilise the supply of electricity;\u00a0\u00a0 Create a competitive and efficient freight logistics system;\u00a0\u00a0 Reduce the cost and improve the quality of digital communication;\u00a0 4. Ensure a stable, quality supply of water; and\u00a0\u00a0 Reform the visa regime to facilitate skilled immigration and support tourism.Since its establishment in 2020, OV has made real progress in achieving these objectives.\u00a0\u00a0For example:\u00a0\u00a0 The energy reforms have created a 22 500 mega-watt pipeline of projects. More than\u00a0 10 000 mega-watts are formally registered with the NERSA, which is one of the last steps\u00a0 in the regulatory process. These projects will contribute to reducing power cuts.\u00a0 The Freight Logistics Roadmap was approved. The roadmap allows private sector\u00a0 participation and gives third-party access to any operator without discrimination in\u00a0 accordance with the network statement.\u00a0\u00a0 The cost of a 1.5GB data bundle has declined by 51 per cent, allowing individuals and\u00a0 small businesses to access more affordable data.\u00a0\u00a0 The water-use licenses backlog has been cleared, unlocking billions in investment and\u00a0 freeing projects that had stalled because of the backlog.\u00a0\u00a0 The water quality regulatory system was reinstated for the first time since 2014. This is\u00a0 the Green Drop, Blue Drop and No Drop certification that enables effective intervention\u00a0 in supporting failing municipalities to provide clean water to citizens.\u00a0\u00a0 e-Visas for travellers from 34 countries have been introduced to significantly boost\u00a0 tourism. The trusted employer scheme has been established to fast-track visa process\u00a0 for major investors.\u00a0\u00a0These achievements have eased economic bottlenecks. And building on the successes, Phase\u00a0 2 of OV will focus on:\u00a0\u00a0\u2022 Following through on existing reforms in energy, water, logistics and visa systems;\u00a0 \u2022 Strengthening local government and improving the delivery of basic services;\u00a0 \u2022 Harnessing digital public infrastructure as a driver of growth and inclusion; and\u00a0 \u2022 Creating efficient, productive and inclusive cities.\u00a0INFRASTRUCTURE\u00a0\u00a0Madam Speaker, infrastructure is a key pillar of our growth strategy.\u00a0\u00a0It is the bedrock for economic development, a key source of jobs, and an avenue to scale-up\u00a0 service delivery.\u00a0\u00a0INFRASTRUCTURE SPENDING\u00a0\u00a0This budget reflects that understanding. Allocations towards capital payments are the fastest growing area of spending by economic classification.\u00a0\u00a0Public infrastructure spending over the next three years will amount to more than R1 trillion.\u00a0 The spending will focus on three sectors:\u00a0\u00a0&#8211; R402 billion for transport and logistics,\u00a0\u00a0&#8211; R219.2 billion for energy infrastructure, and\u00a0\u00a0&#8211; R156.3 billion for water and sanitation.\u00a0\u00a0In transport, the South African National Roads Agency (SANRAL) will spend R100 billion over\u00a0 the medium term to keep the national road network in good condition.\u00a0\u00a0Provincial roads departments will reseal over 16,000 lane-kilometres of roads in their areas\u00a0 of authority.\u00a0\u00a0The Passenger Rail Agency of South Africa (PRASA) is making steady progress to rebuild\u00a0 infrastructure to provide affordable commuter rail services.\u00a0\u00a0To sustain this progress, we have provisionally allocated an additional R19.2 billion over the\u00a0 medium term for critical signalling upgrades.\u00a0\u00a0This will enable commuters from areas like Mamelodi, Kwa-Mashu, Motherwell and\u00a0 Khayelitsha to catch a train every 10 minutes, to get to and from work and significantly reduce\u00a0 the money that low-income households spend on transport.\u00a0The allocation will also allow PRASA to maximise the potential of the 241 new trains delivered\u00a0 through the rolling stock renewal programme.\u00a0\u00a0Despite the progress made, PRASA\u2019s procurement system needs strengthening.\u00a0\u00a0The management of the entity have already instituting measures to strengthen their\u00a0 procurement weaknesses. This includes getting support from the National Treasury to build\u00a0 capacity and mitigate risks and undertaking live audits for large procurement projects.\u00a0\u00a0In water, we are investing in several large-scale dam projects that are ramping up or entering\u00a0 construction.\u00a0\u00a0The Mkhomazi Project is expected to commence construction in November 2027, transferring\u00a0 water to the Mngeni Water Supply System. This will increase the total capacity of the system\u00a0 to 5 million households in eThekwini and 4 district municipalities in KwaZulu Natal.\u00a0\u00a0The Berg River-Vo\u00eblvlei Augmentation Scheme is expected to start in July 2026. The project\u00a0 will improve the Western Cape\u2019s Water Supply System, improving regional water security\u00a0 while reliably supplying domestic, agricultural and industrial water users.\u00a0\u00a0To further accelerate infrastructure delivery and effectiveness, we are continuing reforms to\u00a0 facilitate greater private sector participation, capital budgeting reform and alternative\u00a0 infrastructure financing.\u00a0\u00a0PUBLIC-PRIVATE PARTNERSHIPS\u00a0\u00a0The new regulations for public-private partnerships (PPPs) have been finalised and will take\u00a0 effect on 1 June 2025.\u00a0\u00a0The regulations reduce the procedural complexity of undertaking PPPs, create capacity to\u00a0 support and manage PPPs, create clear rules for managing unsolicited bids, and strengthen\u00a0 fiscal risk governance.\u00a0\u00a0The regulations also make provision for national departments to establish sector-specific PPP\u00a0 units. These units will drive private sector participation (PSP), creating opportunities to\u00a0 optimise the balance sheets of financially distressed state-owned companies.The Department of Transport and Transnet will engage the market on PSP projects in the\u00a0 following areas:\u00a0\u00a0 The ore, chrome, coal and manganese lines.\u00a0\u00a0 Expansion and automation of the ferrochrome and magnetite terminal at the port of\u00a0 Richards Bay.\u00a0\u00a0 The container and automotive sectors, including the potential designation of the SA\u00a0 container port system as a regional trans-shipment hub for major shipping lines.\u00a0 \u2022 And establishment of independent rolling stock leasing company.\u00a0Should Transnet require gap funding for its PSP projects, the Budget Facility for Infrastructure\u00a0 (BFI) will consider these after proper packaging and financial structuring.\u00a0\u00a0Additional guarantees may also be considered to refinance the entity\u2019s maturing debt as well\u00a0 as its capital investment programme.\u00a0\u00a0In the energy sector, the Independent Transmission Programme will be launched later this\u00a0 year.\u00a0\u00a0A request for information for a multi-line transmission package will also be issued by the\u00a0 Independent Power Producers Office in July this year, followed by a request for proposals in\u00a0 November.\u00a0\u00a0These will enable the private sector to play a key role in the expansion of the transmission\u00a0 network.\u00a0\u00a0BUDGET FACILITY FOR INFRASTRUCTURE\u00a0\u00a0Madam Speaker, we have reconfigured the BFI to run multiple bid windows instead of just\u00a0 one annual window.\u00a0\u00a0Earlier this week, we published a call for proposals under the new system.\u00a0\u00a0The first window is now open and will close mid-April. The next window will open soon\u00a0 thereafter. Financing decisions to determine the appropriate fiscal mechanism to support projects have\u00a0 also been separated from the evaluation and budget processes.\u00a0\u00a0This will facilitate the mobilising of significant private finance and improve allocative\u00a0 efficiency in fiscal support.\u00a0\u00a0ALTERNATIVE FINANCING ARRANGEMENTS\u00a0\u00a0Lastly, our efforts to diversify the financing strategy to support infrastructure are taking\u00a0 shape.\u00a0\u00a0A credit guarantee vehicle to mobilize private sector capital by derisking projects, will be\u00a0 launched in 2026. Its initial focus will be on independent transmission aimed at bridging the\u00a0 energy transmission deficit. Once the vehicle has demonstrated its efficacy, it will be\u00a0 broadened to include other sectors.\u00a0\u00a0Government will issue its first infrastructure bond in 2025\/26. We will also introduce other\u00a0 innovative financing instruments to diversify the infrastructure funding sources. Financial\u00a0 institutions including pension funds, banks, development banks and international financial\u00a0 institutions have already expressed interest in participating.\u00a0\u00a0This, Madam Speaker, is how we plan to leverage infrastructure investment to ease supply\u00a0 side constraints to the economy and improve the quality of public services the people get.\u00a0\u00a0REVENUE AND TAX PROPOSALS\u00a0\u00a0Madam Speaker,\u00a0\u00a0There are several persistent spending pressures in health, education, transport and security.\u00a0 These have to do with the government properly fulfilling its service delivery mandate.\u00a0\u00a0After careful consideration, the government has decided to fund these. Deferring the funding\u00a0 of these sectors further would compromise the government\u2019s ability to meet its constitutional\u00a0 obligations to the people.\u00a0To raise the revenue needed, the government proposes to increase the VAT rate by half- a percentage point in 2025\/26, and by another half-a-percentage point in the following year.\u00a0\u00a0This will bring the VAT rate to 16 per cent in 2026\/27.\u00a0\u00a0Government also proposes no inflationary adjustments to personal income tax brackets,\u00a0 rebates and medical tax credits.\u00a0\u00a0These measures will raise R28 billion in additional revenue in 2025\/26 and R14.5 billion in\u00a0 2026\/27.\u00a0\u00a0Madam Speaker, this decision was not made lightly. No Minister of Finance is ever happy to\u00a0 increase taxes.\u00a0\u00a0We are aware of the fact that a lower overall burden of tax can help to increase investment\u00a0 and job creation and also unlock household spending power.\u00a0\u00a0We have, however, had to balance this knowledge against the very real, and pressing, service\u00a0 delivery needs that are vital to our developmental goals and which cannot be further\u00a0 postponed.\u00a0\u00a0OPTING FOR VAT\u00a0\u00a0Honourable Members, we thoroughly examined alternatives to raising the VAT rate. We\u00a0 weighed up the policy trade-offs involved, including increases to corporate and personal\u00a0 income taxes.\u00a0\u00a0Increasing corporate or personal income tax rates would generate less revenue, while\u00a0 potentially harming investment, job creation and economic growth.\u00a0\u00a0Corporate tax collections have declined over the last few years, an indication of falling profits\u00a0 and a trading environment worsened by the logistics constraints and rising electricity costs.\u00a0\u00a0Furthermore, South Africa\u2019s corporate income tax collections are already higher than most of\u00a0 our peer countries.\u00a0\u00a0On the other hand, an increase to the personal income tax rate would reduce taxpayers\u2019\u00a0 incentives to work and save.\u00a0Our top personal income tax rate and our personal income tax collections as a percentage of\u00a0 GDP are far higher than those of most developing countries. Increasing it is therefore not\u00a0 feasible.\u00a0\u00a0Taking on additional debt to meet the spending pressures was also not feasible. The amount\u00a0 is simply too large. The cost of borrowing would be unaffordable. Our sub-investment credit\u00a0 rating would also make this level of borrowing costlier and put us at risk of even further\u00a0 downgrades.\u00a0\u00a0Madam Speaker, VAT is a tax that affects everyone. By opting for a marginal increase to VAT,\u00a0 its distributional effect and impact were cautiously considered.\u00a0\u00a0The increase is also the most effective way to avoid further spending cuts and to enable us\u00a0 extend the social wage.\u00a0\u00a0CUSHIONING HOUSEHOLDS\u00a0\u00a0The government is very aware of the cost-of-living pressures faced by households, including\u00a0 high food and fuel prices and rising electricity and transportation costs.\u00a0\u00a0This is why we are taking concrete steps to protect vulnerable households.\u00a0\u00a0The is done through:\u00a0\u00a0 Providing social grant increases that are above inflation.\u00a0\u00a0 Expanding the basket of VAT zero-rated food items to include canned vegetables, dairy\u00a0 liquid blends, and organ meats from sheep, poultry and other animals.\u00a0\u00a0 We are also not increasing the fuel levy for another year, saving consumers around R4\u00a0 billion.\u00a0\u00a0RESOURCING SARS\u00a0\u00a0Madam Speaker, broadening the tax base and improving the administrative efficiency of the\u00a0 South African Revenue Service, allows us over time, to spread the tax burden more evenly\u00a0 and equitably.\u00a0\u00a0With this in mind, SARS is allocated R3.5 billion in the current financial year and an additional\u00a0 R4 billion over the medium term.\u00a0By the end of February this year, SARS reported a significant increase in undisputed debt. This\u00a0 means billions of Rands are owed to the State.\u00a0\u00a0The revenue collector has also detected 156 000 taxpayers who are not registered or have\u00a0 not filed despite their substantial economic activity.\u00a0\u00a0I call on all South Africans to comply with the law and support SARS in its endeavour to collect\u00a0 the revenues that enable government to fund and provide critical services.\u00a0\u00a0I also want to emphasise the importance of tax compliance.\u00a0\u00a0I thank all compliant taxpayers who pay their fair share of taxes. I also encourage those that\u00a0 are not compliant to do the right thing.\u00a0\u00a0The rewards of higher tax compliance and efficiency take time. Once again, the investments\u00a0 we make today in SARS will allow the collector the time to make improvements.\u00a0\u00a0SPENDING PRIORITIES AND THE DIVISION OF REVENUE\u00a0\u00a0Madam Speaker, the revenue proposed through the tax measures announced in this Budget\u00a0 will contribute largely to us providing R232.6 billion in additional funding to key programmes\u00a0 over the medium term.\u00a0\u00a0This amounts to R102 billion in 2025\/26, R68 billion in 2026\/27, and R62 billion in 2027\/28.\u00a0\u00a0The funding is for spending pressures for infrastructure investments, social protection, a\u00a0 higher-than-anticipated public-service wage agreement, and provisional allocations for\u00a0 critical frontline services.\u00a0\u00a0Honourable members, in the last year alone public sector health system lost close to 9,000\u00a0 health workers. We did not have the money to retain or replace them even after reprioritising\u00a0 funds budgeted for consumables and medicines.\u00a0\u00a0Accruals in the sector, which is the money owed by departments to vendors for services\u00a0 already provided, also ballooned to nearly R22 billion.\u00a0\u00a0This means that the money allocated to departments ends up paying for previous services\u00a0 and goods rather than for the current needs, setting off a vicious cycle of budget shortfalls,\u00a0 unpaid invoices, and a crisis in cashflow and the planning and predictability of budgets.\u00a0\u00a0\u00a0This is an untenable situation that we could not leave unresolved.\u00a0\u00a0As a result, consolidated spending, which excludes interest payments, increases from R2.4\u00a0 trillion in 2024\/25 to R2.83 trillion in 2027\/28.\u00a0\u00a0Provinces will receive R2.4 trillion over the MTEF period. This budget includes additional\u00a0 allocations to support critical provincial functions related to health and education.\u00a0\u00a0We trust that the allocations will be used for their intended purposes.\u00a0\u00a0The local government equitable share will increase from R99.5 billion in 2024\/25 to R115.7\u00a0 billion in 2027\/28. This is to fund increases in the cost of bulk water and electricity costs\u00a0 provided for free to needy households.\u00a0\u00a0In 2025\/26, 83 per cent of the local government equitable share provides a free basic services\u00a0 package of R610 per month to 11.2 million poor households.\u00a0\u00a0Honourable Members, this package of free municipal services continues to be a key tool for\u00a0 reducing poverty and inequality, raising living standards and facilitating access to greater\u00a0 economic opportunities.\u00a0\u00a0PUBLIC SECTOR PERSONNEL AND WAGES\u00a0\u00a0Madam Speaker, a three-year wage agreement has been reached. Although the agreement\u00a0 exceeds the 2024 Budget and MTBPS projections, its duration reduces uncertainty in budget\u00a0 planning.\u00a0\u00a0This agreement will cost an additional R7.3 billion in 2025\/26, R7.8 billion in 2026\/27 and R8.2\u00a0 billion in 2027\/28.\u00a0\u00a0\u00a0\u00a0An amount of R11 billion is provisionally allocated over the next two fiscal years for the early\u00a0 retirement initiative, whose intention is to attract younger employees into the public service.\u00a0 Preliminary savings are expected to average R7.1 billion per year over the medium-to-long\u00a0 term. The savings will be retained by departments.\u00a0\u00a0The interventions on the wage bill are aimed at ensuring that when key frontline staff are lost\u00a0 through natural attrition and retirement, sectors are able to fill vacant posts to keep services\u00a0 running effectively. EARLY CHILDHOOD DEVELOPMENT AND BASIC EDUCATION\u00a0\u00a0Paying salaries constitute 76 per cent of provincial education budgets. This means that only\u00a0 R24 out of every R100 of their budget is left for funding school infrastructure, meals for\u00a0 learners from poor backgrounds, and stationery and textbooks, amongst others.\u00a0\u00a0Our learner-teacher ratios remain higher than we would like, meaning that we still need more\u00a0 teachers in classrooms.\u00a0\u00a0To prevent compensation of employees from crowding out other equally important areas of\u00a0 spending, R19.1 billion is added over the medium term to keep approximately 11 000\u00a0 teachers in classrooms.\u00a0\u00a0The foundation to building the next generation of citizens who contribute economically and\u00a0 socially to this great nation is early childhood development.\u00a0\u00a0Despite this, the subsidy for ECD has not increased from the 2019 level of R17 per day, per\u00a0 child.\u00a0\u00a0To remedy this, an additional R10 billion over the medium term is allocated to increase the\u00a0 subsidy to R24 per day per child. The extra funding will also support increased access to ECD\u00a0 for approximately 700 000 more children, up to the age of four years old.\u00a0\u00a0HEALTH\u00a0\u00a0Health spending will grow from R277 billion in 2024\/25 to R329 billion in 2027\/28 to support\u00a0 the equitable provision of public health services, including free primary healthcare.\u00a0\u00a0Like in provincial education, a significant portion of the provincial health budget is spent on\u00a0 the salaries and wages.\u00a0\u00a0R28.9 billion is added to the health budget, mainly to keep about 9 300 healthcare workers in\u00a0 our hospitals and clinics.\u00a0\u00a0It will also be used to employ 800 post-community service doctors, and to ensure that our\u00a0 pharmacies do not run out of medicines. SOCIAL SECURITY\u00a0\u00a0Honourable Members, social grants are allocated R284.7 billion in 2025\/26. This allows us to\u00a0 increase:\u00a0\u00a0 The old age and disability grants by R130 to R2 315 in April.\u00a0\u00a0 The Child Support Grant by R30 to R560 per month.\u00a0\u00a0 The foster care grant by R70.\u00a0\u00a0The COVID19 Social Relief of Distress (SRD), in its current form, will be extended by a year to\u00a0 end March 2026. R35.2 billion is allocated for this purpose.\u00a0\u00a0As announced by the President in the State of the Nation Address, the SRD will be used as a\u00a0 basis for the introduction of a sustainable form of income support for unemployed people.\u00a0\u00a0The future form and nature of the SRD will be informed by the outcome of the review of active\u00a0 labour market programmes.\u00a0\u00a0This is expected to be completed by September 2025.\u00a0\u00a0Madam Speaker, nearly 28 million beneficiaries will access social grants.\u00a0\u00a0The truth is that ours is one of the most comprehensive social safety nets among emerging\u00a0 economies. This reflects our commitment to addressing poverty and inequality, while keeping\u00a0 our spending sustainable.\u00a0\u00a0PEACE AND SECURITY\u00a0\u00a0In this budget, we have also made a provision to replenish funding for our security functions\u00a0 and peace-keeping commitments.\u00a0\u00a0R9.4 billion is allocated to fund the defence force and correctional services.\u00a0\u00a0Over the medium term, R5 billion has been allocated to the Department of Defence to support\u00a0 South Africa\u2019s participation in the Southern African Development Community (SADC) mission\u00a0 in the Democratic Republic of the Congo and to supplement existing peace keeping activities.\u00a0\u00a0We will continue working with the Department of Defence on ways to change the\u00a0 composition of expenditure to modernise the defence force.\u00a0Madam Speaker, combating financial crimes and corruption is essential to protecting the\u00a0 integrity of our economy and the institutions that foster stability and social wellbeing.\u00a0\u00a0Funds are allocated for enhancing the financial forensic and accounting capabilities in our law\u00a0 enforcement institutions, to further strengthen our ability to detect and prosecute complex\u00a0 economic crimes.\u00a0\u00a0These efforts address recommendations from the Financial Action Task Force and the State\u00a0 Capture Commission, ensuring that we continue to fight money laundering and the financing\u00a0 of terrorism with urgency and precision.\u00a0\u00a0There are remaining issues that require work during the year which may require funding later\u00a0 this year. These includes:\u00a0\u00a0 Infrastructure projects in the BFI and the rolling stock fleet renewal programme;\u00a0 \u2022 Accommodating population changes that impact on the provincial equitable share\u00a0 allocations;\u00a0\u00a0 Strengthening capabilities in the Office of the Chief Justice, Statistics South Africa and\u00a0 the South African Revenue Service; and\u00a0\u00a0 Political party funding and infrastructure provision for royal houses.\u00a0 BUILDING STATE CAPABILITY\u00a0\u00a0Madam Speaker, our ability to deliver quality public services depends on having a competent,\u00a0 capable and ethical state.\u00a0\u00a0Delivering reliable and sustainable core services is a priority for this government.\u00a0\u00a0Our focus must remain on more effective and efficient service delivery, and a proper\u00a0 combination between personnel expenditure, operating costs and the maintenance of\u00a0 physical facilities and assets, supported by professional and efficient administration.\u00a0BUDGET REFORMS\u00a0\u00a0For over a decade, budgets have been trimmed across the board.\u00a0\u00a0While these measures have helped maintain fiscal discipline, they have often been\u00a0 implemented without a thorough interrogation of whether the funds we allocate truly\u00a0 support our national priorities.\u00a0\u00a0We must acknowledge that over time budgets tend to grow incrementally, often carrying\u00a0 forward historical allocations, without necessarily reflecting the evolving needs of our\u00a0 country.\u00a0\u00a0This approach has led to inefficiencies, misalignments, duplications and, in some cases, the\u00a0 continued funding of programmes that do not yield the intended impact.\u00a0\u00a0\u00a0\u00a0We recognise the urgent need to address this. We are not deaf to the public\u2019s concern about\u00a0 wasteful and inefficient expenditure.\u00a0\u00a0We know that we must earn the taxpayer\u2019s trust every day, by spending public money with\u00a0 care and ensuring that every rand collected is spent on its intended purpose.\u00a0\u00a0\u00a0\u00a0Since 2013, as part of the ongoing revaluation of the operations of government, the National\u00a0 Treasury and provincial treasuries have undertaken 240 spending reviews.\u00a0\u00a0These reviews range from examining efficiencies in administrative functions, like office\u00a0 accommodation, fleet management and overtime pay in various sectors, to measuring the\u00a0 effectiveness of service delivery programmes in health, education and human settlements.\u00a0\u00a0The consolidated recommendations of these reviews will be taken to Cabinet in the next\u00a0 month.\u00a0\u00a0The President has also undertaken to establish a committee between the Presidency and\u00a0 Treasury to identify waste, inefficient and underperforming programmes. Thank you for this\u00a0 commitment, Mr President!\u00a0\u00a0As the National Treasury, we are ready to take the lead to improve the effectiveness and\u00a0 efficiency of spending. We will:\u00a0 Undertake an audit of ghost workers, starting with national and provincial departments.\u00a0\u00a0 Use the ongoing, detailed review of labour market activation programmes and public\u00a0 employment programmes to consolidate and rationalise the entire public employment\u00a0 ecosystem. The aim of the review is to reduce duplication and improve operational\u00a0 efficiencies across the more than 100 active labour market programmes in over 20\u00a0 public institutions. The recommendations of this review will be presented to Cabinet in\u00a0 due course.\u00a0\u00a0 The Treasury will implement significant changes to the budget process by reassessing\u00a0 the initial assumptions informing budget allocations, with a view to creating room for\u00a0 improved spending.\u00a0\u00a0Madam Speaker, these reviews go beyond mere cost-cutting measures.\u00a0\u00a0They allow us to systematically assess whether public expenditure is effectively aligned with\u00a0 the priorities of this government, and whether it delivers the best possible value for money\u00a0 and impact for the people of South Africa while keeping us on the path of fiscal sustainability.\u00a0\u00a0These initiatives will give impetus to the slow implementation of the recommendations of\u00a0 spending review.\u00a0\u00a0I call on Ministers, MECs, DGs, HoDs and every official responsible for public funds, to\u00a0 embrace these efforts and play their part.\u00a0\u00a0IMPLEMENTING THE CONDITIONAL GRANT REVIEW\u00a0\u00a0The proliferation of conditional grants has necessitated a review of conditional grants to\u00a0 reduce duplication and improve the effectiveness of programmes.\u00a0\u00a0This budget will implement the first phase of the recommendations of the review and includes\u00a0 merging conditional grants in basic education and agriculture.\u00a0\u00a0Performance based conditional grants to metropolitan municipalities are also introduced,\u00a0 linked to institutional, governance and financial reforms to improve services.\u00a0BUILDING DISASTER RESILIENCE\u00a0\u00a0Madam Speaker, the incentives in our current disaster management system are skewed\u00a0 towards relief and rehabilitation, when mitigation and readiness to minimise damage is the\u00a0 most cost effective response.\u00a0\u00a0Our municipalities stand at the frontline of disaster response yet they are hamstrung by aging\u00a0 infrastructure, bureaucratic fragmentation, and limited access to emergency funds.\u00a0\u00a0The priority is to reduce the administrative burden to access emergency funds. Every hour of\u00a0 delay costs lives and livelihoods.\u00a0\u00a0Continuous improvements are made to the grant system to incentivise municipalities to\u00a0 access a variety of funding instruments for disasters. These include their own budget, the\u00a0 contingency reserve, conditional grant funding and insurance.\u00a0\u00a0The Budget allocates R1.7 billion to respond to future disasters over the medium term, while\u00a0 R4 billion is provisionally allocated to address backlogs in recovery efforts for provinces and\u00a0 municipalities.\u00a0\u00a0STRENGTHENING LOCAL GOVERNMENT\u00a0\u00a0The decline in municipal services is evident across cities, towns and rural villages highlighting\u00a0 the systemic challenges faced by this varying group of municipalities.\u00a0\u00a0As outlined by the President in his State of the Nation Address, phase 2 of Operation\u00a0 Vulindlela, the institutional structure of local government will be reviewed through the\u00a0 updating of the white paper of local government.\u00a0\u00a0In line with the constitutional principle of funds follow function, the review of the local\u00a0 government fiscal framework will examine how to appropriately finance local government,\u00a0 relative to their functions and their form.\u00a0\u00a0Reforms to the revenue generating services of local government, namely water and\u00a0 sanitation, electricity and refuse removal are underway.\u00a0\u00a0Six of the eight metropolitan municipalities have met the minimum requirements to\u00a0 participate in the financial performance incentive grant, the Urban Development Financing\u00a0 Grant.\u00a0Further allocations in the programme are dependent on municipalities meeting specific\u00a0 targets related set out in their performance improvement action plans.\u00a0\u00a0For 2025\/26, this includes critical institutional, governance and management changes to\u00a0 create an enabling environment for long term investment in infrastructure.\u00a0\u00a0By ring-fencing the revenues from these services, and running operating surpluses, these\u00a0 business units can generate funds for infrastructure improvements to deliver quality and\u00a0 reliable services.\u00a0\u00a0CONCLUSION\u00a0\u00a0Madam Speaker, in conclusion, allow me to reiterate that through the policy choices we have\u00a0 made and the carefully targeted allocations we are proposing, public institutions should be in\u00a0 a better position to continue delivering much needed services to the people.\u00a0\u00a0This budget reflects our collective efforts to chart a path through difficult times to prosperity.\u00a0\u00a0It represents a vision of the future and a realistic assessment of the present, as well as the\u00a0 options available to us right now.\u00a0\u00a0This vision can only be achieved by making difficult but considered policy choices, choices that\u00a0 weigh up the trade-offs and commit to a way forward.\u00a0\u00a0\u00a0\u00a0Honourable Members, this budget is the product of the combined and careful consideration\u00a0 of the Cabinet of the Government of National Unity, that has done the difficult and necessary\u00a0 work of assessing the alternatives open to us at the current juncture in our growth journey.\u00a0\u00a0Honourable Members, this budget is also a proposal to you as the Parliament that has been\u00a0 democratically elected to represent the aspirations and interests of all South Africans by\u00a0 confronting the difficult choices needed to move our country forward.\u00a0\u00a0It is in this spirit that I draw on the words of the pan-African leader, Amilcar Cabral, who\u00a0 advised us to:\u00a0\u00a0\u201cAlways bear in mind that the people are not fighting for ideas, for the things in anyone&#8217;s\u00a0 head.\u00a0They are fighting to win material benefits, to live better and in peace, to see their lives go\u00a0 forward, to guarantee the future of their children.\u201d\u00a0\u00a0The policy choices proposed here are about achieving these material benefits. They are about\u00a0 moving South Africa and all South Africans forward into a better, more prosperous and\u00a0 equitable future.\u00a0\u00a0Speaker, as I close, allow me to express my deepest gratitude to the President and Deputy\u00a0 President for their counsel, their support and for their leadership.\u00a0\u00a0Thank you also to the Deputy Ministers of Finance and the excellent National Treasury team\u00a0 led by the Director-General.\u00a0\u00a0Thank you to the Commissioner of the South African Revenue Service and the Governor of\u00a0 the South African Reserve Bank, for their astute stewardship of these two key institutions.\u00a0\u00a0Thank you to my Cabinet colleagues, the Ministers\u2019 Committee on the Budget, and the Budget\u00a0 Council, who share the heavy load of the tough decisions that we must make to maintain\u00a0 the sustainability of our public finances.\u00a0\u00a0To the Parliamentary Committees of Finance, Appropriations and Public Accounts, I express\u00a0 my sincere appreciation.\u00a0\u00a0To my dear wife and family, your care, understanding and support is a constant source of\u00a0 strength and inspiration. Thank you.\u00a0\u00a0\u00a0\u00a0Lastly, thank you to South African people who continue to entrust their aspirations to us.\u00a0 BUSINESS REPORT\u00a0BR Budget Logo.<\/p>","protected":false},"author":1,"featured_media":12853,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-12851","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/12851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=12851"}],"version-history":[{"count":2,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/12851\/revisions"}],"predecessor-version":[{"id":12854,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/12851\/revisions\/12854"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/12853"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=12851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=12851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=12851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}