Godongwana tables 2025 budget, gives reality check on underperforming economy

JOHANNESBURG - Finance Minister Enoch Godongwana has given the country a reality check on the under-performing economy, as government weighs its options on how to give public finances a facelift.

Godongwana tabled the revised budget for 2025 at the National Assembly on Wednesday afternoon, setting the tone on financial, economic and social priorities.

Part of this tough talk is what he planned to deliver almost a month ago before the speech was unexpectedly aborted over a tax disagreement among GNU parties.

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While his speech comes amid concerns about slow growth, a fiscal deficit, structural challenges and global tensions, Godongwana said there was also a dose of good news on the horizon.

Over the next three years, GDP growth is projected to average 1.8%, up from the 0.6% seen in 2024.

The overall 2024 GDP figure was revised down from 0.8% to 0.6% earlier in March when Stats SA released the year's final quarter figures.

Despite the lower-than-expected growth last year, regular electricity supply, slowing inflation and declining interest rates are believed to be improving confidence and enhancing the investment environment.

Going forward, Godongwana said that investing in electricity, water, rail and transportation infrastructure, supporting job creation and maintaining a growth-friendly fiscal policy would underpin government policy over the medium term.

"To meet our goals of redistribution, redress and structural transformation, the economy needs to grow much faster and in an inclusive manner."

By way of consolation, Godongwana said government also expects to reach two important milestones in rebuilding the public finances over the next year.

This includes stabilising public debt at 76% of GDP in the 2025/26 fiscal year.

"As debt stabilises, a growing primary surplus will enable the government to reduce debt-service costs as a proportion of revenue. Some of those savings will be used to build up fiscal buffers that we need as protection against future economic shocks. Shocks like the COVID-19 pandemic, and other uncertainties stemming from the rising geopolitical tensions and the global economic ramifications thereof."

Meanwhile, debt-service costs will peak in 2024/25, stabilising at 21.7% of revenue, and will decline thereafter.

Partly continuing from previous budgets and in addition to infrastructure investments, macroeconomic stability and structural reforms, building state capability to ensure effective and efficient service delivery remains key.