Finance Minister Enoch Godongwana delivers the 2025 Budget. Photo: Jeffrey Abrahams/Gallo Images
Finance Minister Enoch Godongwana on Wednesday maintained infrastructure spending plans for the medium term at above R1 trillion while scaling back his budget allocations elsewhere.
Presenting the 2025 budget in parliament Godongwana insisted it was not an austerity budget, and aimed to promote faster economic growth.
This was his third budget after the first one in February and the second in March failed because of contentious increases in VAT.
“To shield our country from the worst impacts of an increasingly uncertain global environment, remains anchored on four pillars: maintaining macroeconomic stability, implementing structural reforms, improving state capability, and accelerating infrastructure investment,” he said.
“This budget invests over R1 trillion in critical infrastructure to lift economic growth prospects and improve access to basic services. Madam Speaker, this is done without compromising the fiscal strategy of sustainable public finances.”
In the now-defunct “Budget 2.0” tabled in March, the treasury had said an estimated R1.03 trillion would be spent over the next three years on public infrastructure projects by state-owned companies, other public entities, and national, provincial and local government.
At the time, it said this would include R402 billion for road infrastructure and R219.2 billion on energy infrastructure, while R156.3 billion would flow to water and sanitation infrastructure.
On Wednesday, Godongwana said the recently launched second phase of Operation Vulindlela — a joint initiative of the presidency and the treasury to accelerate structural reforms and support economic recovery — would focus on harnessing digital transformation to drive the adoption of digital technologies and “build digital public infrastructure for use by all South Africans”.
“In this difficult environment, it remains vital that we still take actions to increase revenue to protect and bolster frontline services, while expanding infrastructure investments to drive economic activity,” he said, cutting South Africa’s GDP growth for 2025 to 1.4% from the 1.9% projected in March.
Public infrastructure spending over the next three years would exceed R1 trillion, the minister said, with the money going to maintenance and repairs, building new infrastructure, as well as acquiring equipment and machinery.
The focus will still be on transport and logistics, energy and water and sanitation, with the same R402 billion allocated to transport and logistics as was done in March. This will include R93.1 billion for the South African National Roads to keep the 24 000km national road network in active maintenance and rehabilitation.
Godongwa said the Passenger Rail Agency of South Africa would get R66.3 billion for its rolling stock fleet renewal and the renewal of the signalling system.
The energy sector will invest R219.2 billion on strengthening the electricity supply network, from generation to transmission and distribution, including investments in renewable energy projects “which continue to contribute to stabilising the power supply resulting in reduced load-shedding”, the minister said.
Efforts to connect more renewable energy projects to the grid and expand the transmission network remain on track, he added.
In the budget, the water and sanitation sector will spend R156.3 billion on expanding dams, as well as bulk infrastructure to service mines, factories and farms.
“To further support infrastructure delivery and improve spending efficiency, the national treasury continues to implement reforms that will facilitate greater private sector participation in public infrastructure,” Godongwana said.