Finance Minister Enoch Godongwana withdrew his 2025 Budget due to legal action from the Democratic Alliance related to a planned 0.5 percentage point VAT increase.<\/p>\n\n\n\n
Godongwana said the National Treasury will table a new 2025 Budget Review on Wednesday, 21 May 2025.<\/p>\n\n\n\n
The new budget will maintain the value-added tax (VAT) rate at 15%, reversing the 0.5 percentage point increase proposed in the 12 March budget.<\/p>\n\n\n\n
The biggest concern about the VAT reversal is that it will leave a R13.5 billion gap in the 2025 Budget, which must be filled.<\/p>\n\n\n\n
Roodt argued that the R13.5 billion gap is not significant in the context of South Africa\u2019s budget, which amounts to R2.6 trillion.<\/p>\n\n\n\n
\u201cThe state did not run out of money or need more money. The emphasis must be that they should spend less money,\u201d Roodt said.<\/p>\n\n\n\n
Consolidated government spending is increasing at an annual average of 5.6%, from R2.4 trillion in 2024\/25 to R2.83 trillion in 2027\/28.<\/p>\n\n\n\n
South Africa\u2019s state spending is highly redistributive, with the social wage making up 61% of total consolidated non-interest spending over the next three years.<\/p>\n\n\n\n
The rapidly increasing state spending, especially on social wages, has created budget deficits for the past sixteen years, forcing the government to fund it with debt.<\/p>\n\n\n\n
South Africa\u2019s debt-to-GDP (gross domestic product) ratio increased from 26% in 2009 to around 76% in 2025.<\/p>\n\n\n\n
Adding the debt from state-owned enterprises and local authorities increases the country\u2019s debt-to-GDP ratio to 95%. This is entirely unsustainable.<\/p>\n\n\n\n
Due to the rising debt burden, South Africa will spend R424.9 billion on debt-service costs this year. This is set to increase further as debt increases.<\/p>\n\n\n\n
Over the medium-term budget framework, debt servicing costs will consume 22 cents of every rand of tax collected.<\/p>\n\n\n\n
South Africa heading for a financial disaster<\/h2>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/08\/Dawie-Roodt-1-1024x683.jpg\")
<\/a>Efficient Group chief economist Dawie Roodt<\/figcaption><\/figure>\n\n\n\nRoodt warned that rising debt and excessive state spending mean South Africa is heading for a financial disaster, which will send the economy into a tailspin.<\/p>\n\n\n\n
\u201cOne day, we will see the South African bond market collapse. The bond market keeps everybody on the straight and narrow,\u201d he said.<\/p>\n\n\n\n
He warned that when the bond market experiences turmoil, yields will rise to between 15% and 25%, sending shockwaves through the local financial market.<\/p>\n\n\n\n
The rand will significantly weaken, negatively affecting the financial market. South African banks will be the hardest hit.<\/p>\n\n\n\n
\u201cInsurance prices will fall. Equity prices will fall. All South Africans will suddenly become much poorer,\u201d Roodt explained.<\/p>\n\n\n\n
The South African Reserve Bank (SARB) will be forced to increase interest rates as inflation will increase due to higher petrol prices.<\/p>\n\n\n\n
\u201cThe economy will go into a tailspin. There will be much weaker economic growth, a deep recession, and all the negative effects that go with it,\u201d he said.<\/p>\n\n\n\n
\u201cThat is what we are heading towards if we do not turn South Africa\u2019s dismal fiscal situation around.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Efficient Group chief economist Dawie Roodt warns that South Africa is in very deep financial trouble.<\/p>\n","protected":false},"author":10,"featured_media":785107,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[13716],"tags":[1459,2562,21799,3796],"class_list":["post-822823","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget-speech","tag-dawie-roodt","tag-efficient-group","tag-finance-minister-enoch-godongwana","tag-national-treasury"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=822823"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822823\/revisions"}],"predecessor-version":[{"id":822824,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822823\/revisions\/822824"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/785107"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=822823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=822823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=822823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/a>Roodt warned that rising debt and excessive state spending mean South Africa is heading for a financial disaster, which will send the economy into a tailspin.<\/p>\n\n\n\n
\u201cOne day, we will see the South African bond market collapse. The bond market keeps everybody on the straight and narrow,\u201d he said.<\/p>\n\n\n\n
He warned that when the bond market experiences turmoil, yields will rise to between 15% and 25%, sending shockwaves through the local financial market.<\/p>\n\n\n\n
The rand will significantly weaken, negatively affecting the financial market. South African banks will be the hardest hit.<\/p>\n\n\n\n
\u201cInsurance prices will fall. Equity prices will fall. All South Africans will suddenly become much poorer,\u201d Roodt explained.<\/p>\n\n\n\n
The South African Reserve Bank (SARB) will be forced to increase interest rates as inflation will increase due to higher petrol prices.<\/p>\n\n\n\n
\u201cThe economy will go into a tailspin. There will be much weaker economic growth, a deep recession, and all the negative effects that go with it,\u201d he said.<\/p>\n\n\n\n
\u201cThat is what we are heading towards if we do not turn South Africa\u2019s dismal fiscal situation around.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Efficient Group chief economist Dawie Roodt warns that South Africa is in very deep financial trouble.<\/p>\n","protected":false},"author":10,"featured_media":785107,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[13716],"tags":[1459,2562,21799,3796],"class_list":["post-822823","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget-speech","tag-dawie-roodt","tag-efficient-group","tag-finance-minister-enoch-godongwana","tag-national-treasury"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=822823"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822823\/revisions"}],"predecessor-version":[{"id":822824,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822823\/revisions\/822824"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/785107"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=822823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=822823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=822823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}