Statement: Budget 3.0 – Taking one step forward and two steps back

The Institute for Economic Justice (IEJ) criticizes South Africa's Budget 3.0 as an 'austerity budget' that reverses previous spending gains. The IEJ highlights significant reductions in non-interest spending, social grants, and infrastructure projects compared to earlier budget versions. The document argues that the government is relying on regressive revenue measures, such as fuel levy increases and unadjusted income tax brackets, while ignoring progressive alternatives and failing to utilize available reserves like the GFECRA.

• Budget 3.0 represents a significant reduction in planned non-interest spending compared to previous versions, with National Treasury reclaiming R52.5 billion between Budget 2.0 and Budget 3.0. When adjusted for inflation, main budget non-interest spending is projected to decline by -0.3% in 2025/26 and -0.2% in 2026/27 and 2027/28.
• Allocations for social grants have been drastically reduced across budget iterations: Budget 1.0 provided R23.2 billion for above-inflation increases, which fell to R8.2 billion in Budget 2.0, and further to R1.6 billion in Budget 3.0. The IEJ claims National Treasury is pressuring SASSA to implement unconstitutional measures to cancel grants to achieve savings.
• Infrastructure spending in Budget 3.0 is approximately R13 billion lower than in Budget 1.0, leaving the country below the minimum R800 billion annual requirement to meet National Development Plan (NDP) targets. The IEJ warns that the government's focus on Public-Private Partnerships (PPPs) may increase fiscal risks and limit equitable access to services.
• The budget's revenue strategy is described as regressive, substituting a VAT increase with a fuel levy hike and failing to adjust Personal Income Tax brackets for inflation, which effectively increases income tax by about 4%. This occurs alongside a 12.74% increase in Eskom tariffs starting 1 April 2025.
• The IEJ identifies the Gold and Foreign Exchange Contingency Reserve Account (GFECRA) as an available revenue source, noting it has reached R390.2 billion, which is R140 billion above the buffer deemed appropriate by the South African Reserve Bank (SARB) and Treasury.

APA

Institute for Economic Justice (2025). Statement: Budget 3.0 – Taking one step forward and two steps back. https://iej.org.za/press-room/statements/statement-budget-3-0-taking-one-step-forward-and-two-steps-back/

Chicago

Institute for Economic Justice. Statement: Budget 3.0 – Taking one step forward and two steps back. 2025. https://iej.org.za/press-room/statements/statement-budget-3-0-taking-one-step-forward-and-two-steps-back/.

Wikipedia

{{cite press release |author=Institute for Economic Justice |title=Statement: Budget 3.0 – Taking one step forward and two steps back |date=22 May 2025 |url=https://iej.org.za/press-room/statements/statement-budget-3-0-taking-one-step-forward-and-two-steps-back/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{instituteforeconomicjustice2025statement, author = {{Institute for Economic Justice}}, title = {{Statement: Budget 3.0 – Taking one step forward and two steps back}}, publisher = {Institute for Economic Justice}, year = {2025}, month = may, url = {https://iej.org.za/press-room/statements/statement-budget-3-0-taking-one-step-forward-and-two-steps-back/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }