Third Round of Budget Speech Finally Delivered as Hidden Costs Hit South Africans

: After two failed attempts and weeks of political wrangling, Finance Minister Enoch Godongwana finally delivered the third iteration of the 2025 National Budget Speech on Wednesday, 21 May. While many South Africans breathed a sigh of relief at the announcement that the proposed VAT increase had officially been scrapped, the true cost of this budget might not be as comforting as it seems.

Speaking after the speech, Sebastien Alexanderson, Head of National Debt Advisors, cautioned consumers to look beyond the headlines. “No VAT increase sounds like a win, but when you dig deeper into the numbers, the financial strain on households is still very real,” he said.

Although VAT will remain at 15%—a move that Minister Godongwana says reflects the government’s commitment to listening to the public—the budget makes up for lost revenue in less obvious ways. These include:

“People might not feel it immediately, but over the next few months, the rise in fuel costs and the bracket creep will slowly erode their purchasing power,” said Alexanderson. “It’s a hidden burden, especially on the working class who are already walking a financial tightrope.”

The government expects to raise R18 billion this year from these indirect tax measures. Yet, South African consumers—already stretched by high interest rates and sluggish economic growth—will bear the brunt. “It’s not just about what you pay at the till,” Alexanderson noted. “It’s about your rent, your transport, your grocery bill—all creeping up while your salary stays the same.”

This is particularly concerning given that South Africa’s economy is projected to grow by just 1.4% in 2025, down from the 1.8% forecast in March. At the same time, debt servicing costs are ballooning, and the national debt-to-GDP ratio is expected to peak at 77.4%—a warning sign that the room for economic manoeuvring is shrinking.

Named by the Global Financial Market Review Awards, National Debt Advisors is the country’s leading debt counselling company. NDA is dedicated to helping South Africans who are struggling with their finances become debt-free in under 60 months. The company negotiates with creditors for reduced monthly interest rates and extended terms, consolidating all debt repayments into one lower monthly instalment. This protects consumers from harassment by creditors, secures their assets against repossession, and leaves them with more money to live on. NDA is committed to helping South Africans gain their financial freedom.

Omega Ngema

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