Finance minister Enoch Godongwana hoped for a warm reception from parliament, despite a cold, dreary and rainy Wednesday afternoon in Cape Town, as he tried for the third time this year to table a budget.
In the process, he said, the National Treasury staff were not the only ones to learn difficult lessons from the budget postponement fiasco, which started in February. Three months later, Godongwana says the Treasury is wiser for the experience and expects a smoother budget process in 2026.
Godongwana tabled a budget on Wednesday for a historic third time in a calendar year. This was due to the last-minute postponement of the first budget in February, which contained a proposal to increase the rate of VAT from 15% to 17%, which was rejected by cabinet. The March budget proposed a 0.5 percentage point rise in VAT for 2025 and a further 0.5 percentage point increase in 2026, but this was opposed by opposition parties and resulted in a legal challenge.
Tabling the budget at a joint sitting of parliament in Cape Town , Godongwana said the past three months illustrated to South Africa that the national budget was more than a mere accounting exercise.
“It is a reflection of the difficult trade-offs needed to balance fiscal sustainability while addressing our developmental goals. It is unsurprising then, that the increase in VAT proposed on March 12 created so much debate. A vital debate, no doubt, but one that also created some uncertainty. There is clarity now. VAT will remain at 15%.”
Briefing journalists ahead of the tabling on Wednesday, Godongwana said fiscal sustainability remains the core of the budget, along with a change in the composition of expenditure, which includes growth in infrastructure spending as the fastest-growing expenditure item.
“I think there are a lot of issues that journalists in this room have missed. We have also missed them. With the outcome of the elections, everybody now being involved, part of our side was not to anticipate how the different political parties want to deal with this question. Moving forward we need to develop ... a consultative process. That’s what we want to think about.”
He said since the postponement in February MPs became excited upon realising that the budget can, to some extent, “be amended”. While MPs rejected a VAT hike, there were diverse proposals for revenue. He said this was a learning process for the Treasury, the GNU and MPs.
“That process on its own has been a learning process and, therefore, we had to delay the budget. People have said the finance minister has messed up, and he has to go. But they have not looked at the nitty-gritty of the process.
“The message is that we have all learnt that the process was cumbersome and it has to be cumbersome because you cannot sit and easily say you are amending the budget. Anyone who amends the budget has to look at these issues. We are all in a learning phase.”
Deputy finance minister David Masondo said the Treasury worked hard to ensure that despite the absence of a VAT hike, the government’s spending priorities, including social support and economic growth investment, remained largely unchanged.
This budget will invest in infrastructure. Over the next three years we spend R1-trillion on infrastructure. We don’t want to rely on only the budget for this. That is why we want to make it easier for the private sector to invest in infrastructure
— David Masondo, deputy finance minister
“This budget will invest in infrastructure. Over the next three years we spend R1-trillion on infrastructure. We don’t want to rely on only the budget for this. That is why we want to make it easier for the private sector to invest in infrastructure.”
As a result of structural reforms, conditions have been set to allow money to flow into infrastructure, including third-party access to the rail network. He said the Treasury learnt from the VAT ordeal that society is concerned with the prioritisation of spending tied to revenue proposals.
He said 97 operators have applied to get into rail infrastructure operations. The department of transport has released requests for information in port infrastructure and, later this year, this should move to requests for proposals through the public-private partnership unit in the transport department.
Deputy finance minister Ashor Sarupen said: “We are aware of the global risks that have been heightened ... and we understand that we need to strengthen our fiscal house as fast as possible. The departments retain their baselines, the provincial baselines remain exact as well.”
Spending reviews have identified savings, and audits are taking place. Spending reviews, including government buildings, will be broadened.
The budget overview alludes to the future of spending reviews, including the closure of non-performing programmes. In a moment of candour around having to arrange three budget sittings in the space of three months, Treasury director-general Duncan Pieterse said: “You can imagine, we are all exhausted.”
However, he added that the team remained proud of what it was able to accomplish in the past three months despite its head of the budget office, Edgar Sishi, being away on sabbatical during the third iteration of the overview.
In the foreword of Wednesday’s budget overview, Pieterse said the Treasury was “committed to learning from and building on” the experience from the budget postponement to ensure the “budget process remains highly transparent, accountable and faithful” to the Treasury’s mandate.
Godongwana told reporters that now that the executive and the legislature were used to functioning under the GNU, he expected the 2026 budget to go “much more smoothly”.
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