South Africa will likely announce a primary Budget surplus on Wednesday, which should provide sufficient financial resources for the state to avert any major tax increases, economists said.

The Budget takes place in a world of increasing economic uncertainty, with geopolitical uncertainty in the Middle East and Ukraine, and the potential economic knock-on effects of higher import tariffs being imposed in the US, clouding the already slow global economic growth prospects.

In South Africa, however, the economy is looking better this year, after lower inflation, three small 0.25 basis point interest rate cuts, lower fuel prices and improved business and consumer confidence all contributed to better growth prospects.

For instance, Standard Bank’s chief economist Goolam Ballim has forecast GDP growth of at least 1.8% in 2025, which is well above the 0.7 % GDP growth of last year. The International Monetary Fund projects growth at 1.5%.

The country reported a primary budget surplus last year, it was the first in 15 years.

Economist Dr Roelof Botha said he does not expect major personal tax announcements, as the likelihood of a R377 billion primary budget surplus meant there would be no need for the state to find additional revenue sources,

He said the Budget surplus arose from much higher than expected mining revenue, with year-on-year price increases of 38% and 7%, respectively, for gold and platinum. Gold’s so-called safe haven status has been boosted by nervousness over the trade policies of the US and geo-political conflict. The precious metal reached a new all-time high of $2 800 (R51 812) per ounce on January 31.

Dr Botha said he hoped the government would also provide further details of the announcements made in the State of the National Address (Sona) this month, which had focussed on substantially increasing spending on infrastructure.

He said a Basic Income Grant at roughly double the price of the so-called “Covid-grant”, which currently stands at R370 a month - would mean that South Africa reaches an important economic milestone, in that nobody could be said to be in abject poverty, as measured by the minimum price to feed one person, which is about R800 per month.

South Africa's debt-to-GDP ratio is projected to hit 74.7% this year, a significant challenge for the government in terms of interest payments. Stabilising this ratio would be advantageous, as it is still better than the expected 80% from rating agencies.

Vunani Capital Group economist and strategist Johan Rossouw said the main thing many economic commentators wanted from the Budget was a “fiscal anchor”, which is a commitment by the government to peg its level of debt, as the government’s rising debt was constricting its ability to pay for delivery of services,

Rossouw said traditionally, for governments, committing to a “fiscal anchor” tends to be a political football as political parties prefer governments to focus on shorter term gains than a long-term fiscal commitment.

Budget Insurance senior manager Brina Briggs said that while the upcoming budget is expected to maintain current rates for personal income tax, VAT, and corporate tax, the taxes on sugar, carbon, tobacco, and alcohol are likely to be raised.

“For average taxpayers, stable tax rates offer predictability, but fiscal slippage is eroding earnings as tax brackets fail to keep pace with inflation. This could leave households worse off despite potential salary raises, there is a hope this will be updated, “ she said.

“The government focus on fiscal consolidation and spending cuts is expected to enhance confidence. Economic growth is forecast between 0.5% and 1.3% in 2025, reflecting challenges, but also positive reforms. Success in large infrastructure projects like water security and port and freight transport could further boost confidence and move South Africa closer to investment grade status, “ she said.

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