Underwhelming Budget, but at least we have one now, analyst says

South Africa's Finance Minister, Enoch Godongwana's Budget 3.0 has been labelled as underwhelming, however, on the bright side, the country now has a complete Budget tabled. 

This was according to Frank Blackmore, Lead Economist at KPMG South Africa. 

Blackmore told Business Report that leading up to this event, a lot of the questions were, what we are going to do with the 75 billion deficits over the medium-term period with no vat increase, in other words, the three years in which the budget is set up.

Blackmore said that it was answered by this budget in the form of, "We will have some increases in fuel costs 15-16 cents per litre on fuel. We will have an increase in borrowing with debt going up to 77.4% of GDP and that's up 1.2% from the previous budget. We will have no expansion of the zero-rated goods basket. We will have a reduced expenditure also over the MTF period. Some frontline services like health and education, although their budgets grow, they grow by less than the previous budgetary amounts. We also see that some additional investment will go into SARS to switch those assets in order to collect more revenue out there."

He added that the most impressive aspect of this budget was that it had been tabled at all.

"The contents of the budget was slightly underwhelming. To balance the 75% deficit, it seemed as if the budget was put around those and not faced with dealing with the issues confronting South Africa at this point. There were reductions in a lot of areas that were obviously necessary because of the lower revenues, except for the public sector wage bill and debt deficit which are increasing," Blackmore said.

Blackmore said that these two issues have been receiving the headlines throughout 2025, and prior to this due to the large hearings of the current budgetary process.

"The negatives of this budget obviously are the increased debt and deficit taking more resources away from frontline services and economic growth initiatives and the social wage. The reduction in the growth of non-interest expenditure (non-interest expenditures is only set to grow by 0.8% over the MTF period). No real increase in spending to get economic growth so we didn't hear without anything in that line. We also saw the minister mentioned that new tax proposals will come in for 2026 to cover an additional 20 billion gap for the full cost for that period," Blackmore said. 

In terms of positivity, Blackmore said that public-private partnerships, with the introduction of the private sector there will be a lot of aspects of positivity in terms of efficiency.

"The continuing structural reforms and Operation Vulindlela Phase 2. These are positive but they are nowhere near large enough to make a meaningful difference at this point to the growth outlook. The expanding spending efficiencies that were mentioned by the minister, including expenditure reviews by certain cabinets, the ending of programs that are not seen to be successful," Blackmore said. 

"I think far more needs to be done in this space in future in order to get our spending aimed at those core activities to get this economy growing at a more positive rate than is currently being achieved," he further said.

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