South Africa is in survival mode, and more needs to be done to stimulate economic growth. Dr Arno van Niekerk, economist and lecturer at the University of the Free State (UFS), said this in his post-budget speech 3.0 analysis.

“We need GDP growth of about 2% at minimum to take the country forward,” says the author of The Inclusive Economy: Criteria, Principles and Ubuntu. Currently, revenue and economic growth forecasts have been revised downwards, a signal that the country is in financial distress.

Finance Minister Enoch Godongwana said in his address on Wednesday that they estimate “real GDP to grow at 1.4 per cent in 2025. This is lower than the 1.9 per cent we projected in March. Over the next two years, we project real GDP growth to rise moderately, to 1.6 per cent in 2026 and 1.8 per cent in 2027”. 

Furthermore, the government’s revenue has also been revised down by R61.9 billion over the three years, owing to a reversal of the VAT increase and the weaker economic growth projections.

VAT will remain at 15%, the Minister of Finance told Members of the National Assembly. #Budget2025 pic.twitter.com/jxvNZthj3t

— Parliament of RSA (@ParliamentofRSA) May 21, 2025

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As a result, the Minister announced increases to the fuel levy for the first time in three years. “The general fuel levy will increase by 16 cents per litre for petrol, and by 15 cents per litre for diesel”. 

However, Dr van Niekerk cautions that this isn’t enough. To that end, the government is investing money into making the South African Revenue Service (Sars) more effective in collecting revenue.

Minister of Finance, Mr Enoch Godongwana, tabled the:
• The 2025 Division of Revenue Bill;
• The 2025 Appropriation Bill;
• The 2025 Estimates of National Expenditure;
• The Revised Information on 2025 Estimates of National Expenditure;
• The 2025 Budget Review published on… pic.twitter.com/1Zxrx9uTHc

— Parliament of RSA (@ParliamentofRSA) May 21, 2025 ">

Minister of Finance, Mr Enoch Godongwana, tabled the:
• The 2025 Division of Revenue Bill;
• The 2025 Appropriation Bill;
• The 2025 Estimates of National Expenditure;
• The Revised Information on 2025 Estimates of National Expenditure;
• The 2025 Budget Review published on… pic.twitter.com/1Zxrx9uTHc

— Parliament of RSA (@ParliamentofRSA) May 21, 2025

Van Niekerk further says more needs to be done to curb government spending. The debt to GDP ratio has increased to 77.4%, which the UFS economist says is the highest since 1994, meaning per day the country pays millions of rands to cover external debt. This is a major burden to the nation’s budget and is something that needs to be consolidated in some way. 

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When asked what is behind the debt, he alludes to the government’s bloated salary bill combined with loans for major infrastructure projects, especially ones going back to preparations for the 2010 World Cup. 

What’s next? 

The focus shifts to trade, which is an important tool in stimulating economic growth, making an amicable solution emanating from the White House interaction on Wednesday, 22 May 2025, more critical than before.

OFM Business Hour cg