The 2025 Budget Bombshell (Who wins, who loses, and what’s next?)

The 2025 Budget Speech is a stark reminder that financial resilience is no longer optional but a pressing necessity. The question is no longer whether these changes will affect you but how prepared you are to weather the storm and emerge stronger, writes Lerato Thwane, Head of E-Commerce at Xpert Decision Systems (XDS), a leading credit information bureau and a division of Mettus.

In what was ‘take two’ of SA’s annual budget speech, Minister of Finance, Enoch Godongwana, stepped into the spotlight to deliver a long-awaited fiscal plan that would shape the country’s economic trajectory. While the anticipation of the speech had consumers, organisations, and even government representatives on a knife’s edge for weeks, the outcome has left many grappling with the realities of what lies ahead.

With economic stagnation, a growing debt burden, and persistent infrastructure challenges, Government has introduced measures to stabilize public finances while addressing pressing economic needs. However, the implications of these changes necessitate a strategic response from individuals and businesses alike.

Navigating the financial impact of VAT increases and fiscal changes in the 2025 Budget

One of the most anticipated announcements was the increase in Value-Added Tax (VAT). Here, Minister Godongwana rescinded the 2% increase signalled last month and has proposed a gradual increase, raising the VAT rate by 0.5 percentage points in 2025/26, followed by another 0.5 percentage points in 2026/27, bringing the final rate to 16%. This move is expected to generate an additional R28 billion in revenue in 2025/26 and R14.5 billion in 2026/27.

For consumers, this means a direct increase in the cost of goods and services, particularly for those not zero-rated or exempt from VAT. While basic food items such as canned vegetables and dairy liquid blends have been added to the VAT-free list to cushion lower-income households, the overall cost of living will likely rise.

For businesses, particularly those in the retail and consumer goods sectors, this translates into increased pricing pressures and potential shifts in consumer spending behaviour. Companies must reassess pricing strategies, manage supply chain costs, and balance the additional tax burden without impacting sales.

In a move to mitigate cost-of-living increases, Government has opted not to increase the fuel levy for another year – a decision that will save consumers around R4 billion. While this provides some consolation for consumers, it offers immediate relief for businesses reliant on transport and logistics, as fuel prices directly affect operational costs. This relief may be temporary. Therefore, businesses should optimize logistics, cut costs, and consider alternative energy sources to reduce dependence on conventional fuel pricing structures.

Beyond tax increases, businesses and consumers are expected to face several financial hurdles. Higher borrowing costs are likely as the rising government debt-to-GDP ratio and an increased focus on maintaining fiscal stability may keep interest rates elevated, making credit more expensive.

Reduced disposable income remains a concern, as stagnant tax brackets, rebates, and medical credits erode purchasing power, impacting economic activity. Rising business expenses, driven by increased wage agreements, infrastructure investments, and additional regulatory costs, could put further financial strain on businesses operating in South Africa.

Adapting to a shifting economic landscape

In response to these challenges, businesses and individuals must adopt a proactive approach to financial management. Companies must conduct detailed financial assessments to identify areas where efficiency can be improved without compromising growth.

Leveraging financial intelligence will be critical, with credit bureaus playing a crucial role in helping businesses assess credit risk, manage debt, and make informed financial decisions amid economic uncertainties. Investing in resilience through digital transformation, automation, and alternative financing models will also be key to ensuring long-term sustainability.

For consumers, reassessing personal budgets will be imperative. With a higher cost of living, individuals must prioritise essential expenses and look for ways to save. Improving credit management will be crucial as borrowing becomes more expensive, making it essential to maintain a strong credit profile and manage debt efficiently. Exploring investment opportunities will also help individuals navigate financial uncertainties by diversifying income streams through savings and smart investments.

The 2025 Budget Speech is more than a policy announcement. It’s a wake-up call that the economic landscape is shifting, and those who fail to adapt will find themselves left behind.

The time for decisive action is now. Those who embrace strategic planning, tighten their financial controls, and remain agile in the face of change will not only survive but thrive. The question is: Are you ready to take control of your financial future?