10 key takeaways from the budget speech

Hundreds of people went to Parliament on Wednesday ahead of the medium-term budget speech. Photo: Alice Scott

Finance minister Enoch Godongwana tabled his medium-term budget before Parliament on Wednesday. Here are our key takeaways:

1. Global and domestic “headwinds” have brought the economic growth forecast for the year (taking inflation into account) down to 1.2% from 1.6% in February. Growth is now expected to reach 1.6% only in 2027, and 2% by 2029. Our borrowing costs have also increased.
2. But government revenue is about R54-billion higher than expected. This is largely thanks to company tax, driven by higher gold and platinum prices. As a result, the budget deficit (the difference between what the government gets in revenue and what it spends) is expected to narrow to 3.9% of gross domestic product this year.
3. The Social Relief of Distress grant has been extended to March 2028, and no new increases to social grants were announced. But grant spending has been cut by R3-billion this year because there have been fewer beneficiaries than projected. See: SRD grant extended for another year
4. Extra revenue means the government can spend more money. R20-billion extra is to be spent on infrastructure this year. Over the next three years, R20.5-billion is added to provinces’ share to help meet higher health and education costs, and R21.8-billion to municipalities for free basic services.
5. Savings on social grants have freed up R1.6-billion over three years towards child nutrition through provincial health departments’ first 1,000 days of life programmes.
6. R5.1-billion is reallocated to fighting gender-based violence over three years. Most of the money will go to hiring more than 3,500 social workers.
7. The fuel levy is being reduced to provide relief from skyrocketing oil prices. From 4 November to 1 December, the fuel levies on diesel will be cut by R3 and on petrol by R1.50 per litre. Between 1 December and 5 January 2027, the levy will be R1.50/litre lower on diesel and R1/litre lower on petrol. This will cost the government R10-billion in lost revenue.
8. Floods in eight provinces are costing billions: an extra R3.54-billion has been allocated to a municipal disaster recovery grant. Because of global uncertainty over energy prices and looming effects of El Niño, this year’s contingency reserve has been increased from R5-billion, which has already been spent, to R10-billion. Over the next three years, the reserve is set at R25.1-billion, R17-billion and R26.1-billion.
9. Municipal finances have continued to worsen. Municipalities are owed R484.5-billion by consumers – up about R57-billion since last year. Municipalities owe their creditors R185.2-billion, up almost R30-billion since last year. In June, transfers to 69 municipalities from the National Treasury were suspended because they were not paying their creditors. By 31 July, 38 municipalities had concluded repayment plans and paid R4.2-billion.
10. The human settlements development grant, which funds RDP/BNG houses, is on pause while a new delivery model is designed. R7.8-billion – about a fifth of the total grant – will be reprioritised over the next three years. This is because “poor planning and implementation contribute to weak delivery,” according to the policy statement. “Programme inefficiencies and rent seeking means that we are spending less on building houses,” Godongwana said in his speech.

COSATU Western Cape was one of the organisations marching to Parliament on Wednesday. Photo: Abonge Chiya

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