HOW government ineptitude wiped out R127 billion in TWO months

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In unprecedented circumstances for the South African government, the country’s predicted GDP fell by R127 billion between March and May 2025. How can anyone forget that Finance Minister Enoch Godongwana under GNU needed three stabs at tabling a fiscal budget in 2025?

Initially, the Finance Minister’s first Budget Speech was cancelled on 19 February 2025. Until he finally delivered his first address on 12 March 2025. In it, the Minister pegged South Africa’s economic growth at an average of 1.8% over three years.

HOW GOVERNMENT WIPED OUT R127 BILLION

However, government saw that budget framework overturned in the court proceedings over the controversial VAT increases. And the process needed to begin again. Therefore, on 21 May 2025, Godongwana delivered an updated 2025 Budget. and in it GDP growth had weakened to 1.6% over three years. That 0.2% may not sound like a lot less, but over three years it represents R127 billion, reports Daily Investor.

“Global growth has faltered, and South Africa’s economic outlook has also weakened, with GDP expected to grow by only 1.4% in 2025. Since the 2025 Budget Review publication in March, greater uncertainty and trade fragmentation have contributed to a weaker economic outlook,” justified Minister Godongwana.

AREN’T ECONOMIC CIRCUMSTANCES IMPROVING?

However, on the face of it, aren’t’ economic circumstances improving? Eskom’s power supply to the country is better than ever and fuel prices have been dropping all year. The trade feud with the United States government looks to be in check (for now) and there have been interest rate cuts across the board. So, why the sustained bleak outlook?

Critically, the government spends the most money each year on two things: Servicing debt and social welfare. Neither of which create jobs to bring any money back into government coffers. Likewise, the International Monetary Fund (IMF) recently cut its economic growth forecast for South Africa to just 1%. Way lower than the anticipated 1.6%. And if the South African economy only grows by 1%, as the IMF predicts, even this subdued budget will have a big hole. As such, if government is forced to borrow yet more money, the already high debt-to-GDP ratio will only worsen …