Budget 3.0: a look at SA's plan to use pension funds for building infrastructure

FINANCE Minister Enoch Godongwana delivered the third iteration of the 2025 national Budget speech last Wednesday.

- JENNIFER REDDY

As citizens, we all hoped this time would bring positive changes. The latest version of the 2025 Budget appears more reasonable within our current economic context and paints a vivid picture of South Africa's finances.

"I believe this Budget supports economic activity while enhancing future economic prospects, directs spending towards the social wage, and invests in state capability and critical infrastructure," said Godongwana.

The Budget revises several key areas, including the country's economic status, growth projections, substantial debt servicing costs, the withdrawal of the controversial VAT increases, and the continuation of the social relief grant.

Although there were no VAT hikes, financial experts warn that public relief may be short-lived.

Rising fuel levies and unadjusted tax brackets to account for inflation mean households could still face financial pressures.

Godongwana noted that, despite sluggish growth over the past decade, South Africa's economy was expected to expand by only 1.4% this year, a reduction from the 1.8% projected in March. This decline is primarily attributed to increased trade tensions, geopolitical issues and policy uncertainty.

Additionally, the new Budget sets the national borrowing requirement at R588 billion for 2025/26, approximately R6 billion more than planned in March.

The 2025 Budget speech, especially in its 3.0 version, emphasises infrastructure investment and explores alternative financing mechanisms, such as infrastructure bonds.

These mechanisms aim to involve various stakeholders in the investment process. The Budget also includes structural reforms to improve access to basic services, particularly in network sectors.