President Cyril Ramaphosa recently referred to the upcoming 2025 National Budget as “Budget 3.0”, signalling an evolution in the government’s fiscal strategy. Much like a software update, each new iteration carries the promise of enhanced features and improvements — yet the true impact is measured not just by ambition but by execution.
As South Africa prepares for this next phase, there is cautious optimism about how the budget will address key challenges, including economic growth, fiscal stability and social development.
In recent media engagements, the president has emphasised several priority areas for Budget 3.0, including a significant R1-trillion allocation for infrastructure development, continued commitment to Operation Vulindlela, and a concerted effort to balance fiscal prudence with initiatives that drive meaningful social progress. These commitments reflect an ongoing drive to address structural economic challenges while ensuring sustainable growth that benefits all South Africans.
A look at past budgets provides useful context in understanding the government’s approach. Budget 2.0 — titled “Investing for Faster Growth” — similarly prioritised infrastructure investment, with R1.03-trillion earmarked for public projects. Operation Vulindlela Phase II was carried forward from previous planning discussions, while fiscal stability remained a cornerstone of the 2024 mid-term budget policy statement.
However, one of the most notable changes in Budget 3.0 is the removal of the proposed VAT increase — an encouraging step that provides some relief for households grappling with cost-of-living pressures. The key question now is how the National Treasury will navigate the revenue shortfall while maintaining essential services and ensuring continued support for social programmes.
While fiscal policy has undergone adjustments, South Africans have had to contend with broader economic uncertainties, including shifts in employment patterns. The latest statistics reveal a year-on-year increase of 42,000 jobs in the first quarter of 2025, yet a closer look shows that this growth was largely driven by a rise in informal employment.
The informal economy saw a dramatic increase of 264,000 jobs compared with the previous year, while formal sector employment declined by 110,000 jobs over the same period. While job creation remains positive, this trend raises concerns about stability, adherence to labour laws, and tax compliance — underscoring the need to strengthen formal sector job growth.
A fundamental element of Budget 3.0 should be a robust commitment to social progress. Beyond addressing economic concerns, South Africans continue to grapple with crime, inefficiencies in the justice system and limited access to essential services. The expansion of the informal economy is not merely a survival mechanism – it reflects individuals actively seeking alternative solutions to systemic gaps within public sector service delivery.
Encouragingly, government-led infrastructure projects have shown visible progress, with the number of completed public initiatives more than doubling in 2024 compared to the previous year. Sustaining this momentum will be crucial in improving economic prospects and ensuring long-term development.
Additionally, reinforcing support for the South African Revenue Service remains a viable strategy for improving revenue collection efficiency. Sars plays a pivotal role not only in securing fiscal resources but also in curbing illicit trade, strengthening compliance, and upholding the rule of law. Efficient revenue collection will be necessary to offset the removal of the VAT increase while maintaining government expenditure in key areas.
Beyond economic policies, previous budget iterations emphasised peace and security, state capacity building, and local government strengthening — areas that, if effectively implemented, can drive meaningful social transformation. Addressing crime and improving the justice system should be considered fundamental to fostering a safer, more stable environment where businesses and individuals can thrive.
Budget 3.0, then, may serve as more than just another iteration in fiscal planning. It presents an opportunity for the government of national unity (GNU) to apply lessons learned, ensuring that governance evolves in a way that supports sustainable development, builds public trust, and reinforces economic stability.
South Africa has seen hard lessons over the past few budget cycles, particularly in ensuring policy continuity and minimising fiscal uncertainties. Much like progressive artificial intelligence, governance should be adaptive — learning from past mistakes and applying those lessons across all pillars of policy implementation.
As economic players navigate uncertainty, stability within the GNU remains crucial to re-establishing public confidence. The future of South Africa’s economic resilience will depend not only on fiscal adjustments but on strengthening governance structures, ensuring transparency, and fostering economic inclusion.
• Makhoba is economist and lead specialist: research & insights at Liberty, part of the insurance and asset management arm for the Standard Bank Group
