Resistance to expenditure cuts, GNU credibility - Godongwana answers our questions after tabling the Budget

Finance Minister Enoch Godongwana finally tabled the 2025/2026 national budget on Wednesday, after two earlier attempts failed mainly due to a proposed increase in value-added tax (VAT).

A few spending adjustments are included in this third version, but the National Treasury also expects to make billions in savings through expenditure reviews.

And while there will be no VAT increase, Godongwana announced an increase in the fuel levy from 4 June as one of the measures to fund the budget shortfall left by the reversal of the VAT hike.

Speaking to Godongwana on The Money Show, Stephen Grootes asks whether this budget process has restored the credibility of the government specifically as a coalition government.

This is a relative issue which would depend on an individual or instition's perspective, the Minister says, but he does believe that the Budget 'by all intents and purposes' IS credible.

The first test is whether it meets the criterion of fiscal sustainability, and the answer here is YES, he says.

"S&P (formerly Standard & Poor's) has already given a heads-up in terms of their appreciation of what we've been saying from that fiscal sustainability side."

Enoch Godongwana, Finance Minister

The Budget also passes the test of being growth oriented, the Minister says.

"I'd say part of that expenditure announced today contributes to growth - properly executed, they will give us the required growth."

Enoch Godongwana, Finance Minister

Third is the question of redistribution, and Godongwana points out here that 61% of this Budget is going to provide support to the social wage, and therefore to the poor.

When it comes to the R20 billion the Budget allows for extra revenue to the South African Revenue Service (SARS), Godongwana notes that this is for the next fiscal year.

"What we are saying, is potentially we'll have to increase taxes by R20 billion next year, assuming that SARS does not meet its promise of R20-50 billion next year. That R20-50 billion is not pencilled in for the current fiscal year."

Enoch Godongwana, Finance Minister

Asked whether an increase in the fuel levy, seen as a tax on the economy, does not go against the aim of a growth budget, the Minister remarks that any tax has implications for growth.

It's one of the trade-offs they needed to make in the new Budget, he says.

"The challenge you have if you sit as a fiscal authority is what are the best options in the current circumstances, and I think in the current environment the option of going for the fuel levy is the best one. It will have an impact on growth, no doubt about that, like any other tax, but that is a necessary trade-off."

Enoch Godongwana, Finance Minister

The promise of expenditure cuts and which programmes or departments will have to bear the brunt of this is another facet of the Budget that could potentially prove to be challenging.

Godongwana highlights that he made the point in his speech that political support is going to be critical in this regard.

"There is going to be resistance in government and in institutions, but I'm comforted because among the President, Deputy President and fellow Cabinet members there was unanimity that this was the direction we need to take."

Enoch Godongwana, Finance Minister

"Those things (like fiscal reform) rest with fiscal authorities, but the key question in the execution of those functions is, can these authorities canvas as many views as possible so that everybody must feel they've been consulted... So, we'll be tabling the Medium Term Budget Policy Statement (MTBPS) in October which sets the parameters for the next three years."

Enoch Godongwana, Finance Minister

"And what should happen between now and October is that we've created a process where Parliament and Cabinet colleagues, provinces and so on contribute to that framework we're likely to be tabling finally before Parliament."

Enoch Godongwana, Finance Minister

To hear more from the Finance Minister, listen to the interview audio at the top of the article