South Africa’s Finance Minister Inock Godongwana presented the 2025/2026 budget on Wednesday. The budget was initially scheduled to be presented in February but was delayed due to disagreements within the cabinet over a proposed 2% increase in value added tax (VAT).
Finance Minister’s response to SRD grant
Ahead of the budget speech, the Finance Minister said the reason for the VAT increase he proposed is the R370 Social Relief of Distress (SRD) grant. The grant was introduced as a temporary aid during the Covid-19 pandemic but has been repeatedly extended.
Godongwana categorically stated that if he was allowed to end the SRD grant, he would not need to increase any other taxes. According to him, many essential expenses are not included in the budget, which has led to additional financial pressure.
SRD grant extended to 2026
In his budget speech on Wednesday, the Finance Minister announced the extension of the SRD grant until the end of March 2026. He has made a provision of R35.2 billion to maintain this grant. This is a relief for millions of needy South African citizens who depend on this grant.
The repeated extension of the SRD grant shows that the government realises its need and impact. However, it is still unclear whether it will continue in the long term or be converted into a permanent social grant.
Increase in SASSA grants
The government has allocated R284.7 billion for permanent social grants (SASSA Grants) in the 2025/26 financial year. Various social grants will be increased through this amount, providing additional support to many needy citizens.
Increase in grants (effective from April 2025):
- Old age and disability grant – Increase of R130, making it R2,315 per month.
- Child support grant – Increase of R30, making it R560 per month.
- Foster care grant – Increase of R70.
Impacts of this budget
The increase in social grants in this budget makes it clear that the government is committed to supporting the poor and vulnerable sections. However, there is also financial pressure due to increasing government expenditure, to overcome which measures like tax increases are being considered.
Positive impacts:
- Needy citizens will get additional financial support.
- Continuation of the SRD grant will provide relief to millions of people.
- An increase in the old-age and disability grant will help senior citizens and persons with disabilities.
Possible challenges:
- There may be a tax increase in the future to meet the fiscal deficit.
- No clear plan to continue the SRD grant permanently has been announced yet.
- If the economic situation does not improve, social grants may be at risk of being cut.
Final Conclusion
The extension of the SRD grant and the increase in SASSA grants in Budget 2025 will provide relief to millions of South Africans. However, the government remains challenged to maintain fiscal balance.
It will be interesting to see what steps the government takes to make the SRD grant permanent and strengthen the social protection structure in the coming years. For now, this budget brings relief news for the vulnerable sections.
FAQs
Q. What is the SRD grant?
A. The Social Relief of Distress (SRD) grant is a temporary financial aid introduced during the COVID-19 pandemic for low-income individuals.
Q. Has the SRD grant been extended?
A. Yes, the SRD grant has been extended until the end of March 2026.
Q. How much is the Old Age grant increase in 2025?
A. The Old Age grant will increase by R130, bringing it to R2 315 per month starting April 2025.
Q. How much funding has been allocated for SASSA grants?
A. The government has allocated R284.7 billion for permanent social grants in 2025/26.
Q. Will there be a VAT increase to fund these grants?
A. A proposed 2% VAT increase was debated, but no final decision has been announced.
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