The Centre for Risk Analysis (CRA) expects Budget 3.0 to pass today, following Finance Minister Enoch Godongwana’s third presentation of the national budget to Parliament.
In a turbulent global context, the passing of this budget will likely be read as a sign of domestic political and market stability, and as an indication that South Africa’s Government of National Unity (GNU) is holding, a factor that could support investor confidence.
That the country is being presented with a third version of the budget on 21 May has done little to calm market jitters about the GNU’s long-term viability. However, the elevated scrutiny of, and marked increase in public interest around, the budget and its approval process bodes well for future accountability, oversight, and ultimately for the quality of the budget itself.
Chief on the agenda today will be just how the current R75 billion budget shortfall will be addressed. The National Treasury has three main options: increase borrowing, raise taxes (excluding VAT), or cut spending.
“Cutting government spending would be the most fiscally responsible move and would send a strong signal to global markets,” said Chris Hattingh, Executive Director at CRA. “But it’s unlikely we’ll see deep cuts, as that would mean reducing politically sensitive expenditures like the public sector wage bill, social grants, and state-owned entity support.”
Another important issue that needs to be addressed, according to the CRA, is that of sluggish economic growth. From 2012 to 2023, South Africa averaged a mere 0.8% GDP growth per annum. In 2024, GDP growth was 0.6%, versus 1.3% population growth, and in 2023, real GDP per capita was lower than it was in 2007. This is within a context of a limited tax base, and where 22c of every R1 goes towards servicing debt.
“These indicators are cause for concern, and we monitor them closely as part of our risk management work. I would only consider Budget 3.0 a success if it gives clear commitment and funding to growth-generating infrastructure investments and policy reforms that would shift these indicators in a meaningful way,” Chris added.
As we anticipate the outcomes of today’s tabling of the budget, it’s worth noting the fact that this year’s budget process has been messy and uncertain, as it reflects the real nature of democracy. “Perhaps we don’t always want to acknowledge the messiness of democratic systems, but they are vastly superior, especially morally, to the alternatives,” Chris said.
In the 2024 general election, South Africans who voted for any party other than the ANC effectively blocked a proposed VAT increase and influenced the trajectory of the budget’s drafting and approval. This is a crucial demonstration of South Africa’s democratic mechanisms at work: that a citizen’s vote has a measurable impact on governance and national direction.
“For citizens to see that their vote carries real weight is vital, reinforcing that democratic participation can directly shape major policy outcomes is key to reversing the trend of declining voter turnout,” Chris added.
The budget is also being tabled as President Cyril Ramaphosa engages in high-level talks in Washington, DC, including a meeting with U.S. President Donald Trump. This comes at a pivotal moment in global trade realignment. With South Africa heavily reliant on trade and investment from the U.S. and Europe, the government’s continued reliance on ideological posturing and historic grievances risks undermining its ability to seize new opportunities. Initiatives like AGOA are under review, and reciprocal U.S. tariffs could resume in July.
South Africa’s trade package aimed at addressing U.S. concerns, particularly around agriculture, automotive exports, and non-tariff barriers, offers some scope for progress. But unless Pretoria also responds to deeper U.S. policy concerns (including property rights and economic regulation), these technical fixes may fall short. Cyril’s visit is an opportunity to shift the rhetoric, embrace more pragmatic diplomacy, and signal a break from outdated foreign policy stances. If the GNU can support broader business- and civil society-led engagement with the U.S., it could open the door to renewed economic cooperation and help restore South Africa’s international credibility.
This is the first time in 31 years that a national budget in South Africa has not been automatically approved by Parliament’s finance committees, due to the end of single-party dominance. Despite these growing pains and an uncertain global context, the CRA sees the emergence of Budget 3.0 as a healthy sign of democratic contestation and a necessary evolution under the new GNU framework.
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