BUDGET 2025 | Social grant spending raised by 5.9% to cushion the poor

The government is increasing its spending on social grants by R8.2bn over the next three years to cushion the poor from the impact of the cost of living.

This comes after a 0.5 percentage point hike in value-added tax (VAT) for the 2025/2026 financial year and by the same amount for the 2026/2027 year, eventually pushing VAT to 16% from 15% in the next two years.

This will push up the costs of basic foodstuffs and other goods and services in the economy, with the impact on the affordability levels of the poor and low to middle income households.

It was for this reason finance minister Enoch Godongwana, during his tabling of the budget in the national assembly on Wednesday, told MPs he was raising social grants by 5.9%. He said this was to cushion the poor from the impact of increased VAT, the first since the hike in 2018.

“The budget for social grants is increased by R8.2bn over the medium term to account for higher costs of living,” he said.

“In April 2025 the old age grant, war veterans grant, disability grant and care dependency grant will each increase by R130 (to R2,315 per month).

“The foster care grant will increase by R70 in April to R1,250 a month.

“The child support grant and grant-in-aid grant will rise by R30 in April to R560 per month.”

Godongwana is extending the social relief of distress (SRD) grant by another year. Despite a tight budget, he has allocated R35.2bn to continue the payment of the R370 grant, at least until March 2026.

The SRD grant was introduced as an interim relief measure at the height of Covid-19 in 2020 to cushion the employed from the impact of the lockdown. Since then, the government has been extending it on an annual basis without declaring it a permanent grant.

The government’s total expenditure on social development for the next financial year amounts to R422bn, projected to rise to R452.6bn by 2028, with 81% of the expenditure going to social grants.

“At an average annual growth rate of 5.3%, social protection spending increases above inflation over the medium term. However, the social grant reform and efficiency saving will be necessary to ensure the sustainability of the social security system.

“The number of social grant beneficiaries, excluding the Covid-19 SRD grant, is expected to rise from 19-million in 2025/26 to 19.3-million in 2027/28, primarily due to the growing population of older people. Therefore the sector’s operational budget will be subject to conditions, including the need to improve biometric verifications of recipients to achieve savings.”

TimesLIVE