The VAT rate will increase by half a percentage point in 2025, and again in 2026. However, if the government raises additional revenue through other measures, it may reconsider the second-year increase.

To support the vulnerable households, the basket of zero-rated food will be expanded, and the fuel levy will remain unchanged for another year

There will be no adjustment to tax brackets or tax rebates this year

The consolidated budget deficit is expected to narrow to 3.5% of GDP by 2027/28 from 5% in 2024/25. A budget primary surplus of 0.9% is projected for 2026/7.

Government debt stabilises at 76.2% of GDP in 2025/26, albeit higher than 75.5% projected in the MTBPS. Importantly, debt service cost as a percentage of revenue stabilises in 2025/26. However, debt service cost is high, it now absorbs 22c for every R1 of revenue raised – which is more than what is spent on health, basic education or policing.

Eskom debt takeover of R70 billion under the debt relief arrangement will be replaced by two advances amounting to R50 billion as the utility is in a better financial position than previous years. This will include R40 billion in 2025/26 and R10 billion in 2028/29 to redeem maturing debts.

The fastest-growing area of spending will be infrastructure in which over R1 trillion will be spent in the next three years on transport and logistics, energy, water and sanitation

Public-private partnership regulatory framework amendments effective from 1 June 2025. These are expected to reduce complexity and create capacity to support and manage partnerships which will benefit the economy. A credit guarantee vehicle to mobilise private capital by de-risking projects will be launched in 2026.

Social grants will increase: the old age and disability grants will rise in April by R130 to R2 315; the child support grant by R30 to R560 per month; and the foster care grant by R70 to R1 250. The Social Relief of Distress Grant will be extended until March 2026.