The budget speech delivered by Minister of Finance Enoch Godongwana on 12 March 2025 outlined several key healthcare-related initiatives and allocations.

Tax revenue for 2024/25 was expected to amount to R1.85 trillion, which is R16.7 billion less than projected at the time of the 2024 Budget. Considering new and persistent spending pressures, Government has decided to raise the VAT rate by 0.5 percentage points in each of the next two years, which will bring VAT to 16 per cent in 2026/27, and with no adjustment made to personal income tax brackets and rebates for inflation in 2025/26. A VAT increase affects everyone, and Government is mitigating the adverse effects for lower-income households, through above-inflation increases to social grants, not increasing the general fuel levy, and expanding the list of foods zero-rated for VAT. Other tax proposals include no inflation adjustments to medical tax credits, above-inflation increases on alcohol and tobacco excise duties, and diesel refund relief for primary sectors.

Healthcare Spending

• Health spending will grow from R277 billion in 2024/25 to R329 billion in 2027/28 to support equitable public health services, including free primary healthcare.
• An additional R28.9 billion is allocated to the health budget to retain approximately 9,300 healthcare workers in hospitals and clinics.
• Funding will also be used to employ 800 post-community service doctors and ensure pharmacies do not run out of medicines.

Social Grants

• Social grants are being allocated R284.7 billion in 2025/26.
• The old age and disability grants will increase by R130 to R2,315 in April.
• The Child Support Grant will increase by R30 to R560 per month.
• The foster care grant will increase by R70.
• The COVID-19 Social Relief of Distress (SRD) grant will be extended by a year (to the end of March 2026) with R35.2 billion allocated for this purpose.

Early Childhood Development (ECD)

• An additional R10 billion over the medium term is allocated to increase the ECD subsidy from R17 to R24 per day, per child.
• This funding will support increased access to ECD for approximately 700,000 more children, up to the age of four years old.

Public Sector Personnel and Wages

• A three-year wage agreement has been reached, costing an additional R7.3 billion in 2025/26, R7.8 billion in 2026/27, and R8.2 billion in 2027/28.
• R11 billion is provisionally allocated over the next two fiscal years to the early retirement initiative, to attract younger employees into public service. The expected savings will average R7.1 billion per year over the medium-to-long term.

Medical tax credits

• No changes to medical tax credits are proposed – these will remain at R364 per month for the first two beneficiaries and at R246 per month for the remaining beneficiaries.

Increasing the VAT rate

• The first 0.5 percentage point increase in the VAT rate will take effect on 1 May 2025 and the second 0.5 percentage point increase will take effect on 1 April 2026.
• In making this decision, Government carefully considered the potential contributions of each of the main tax instruments.

NHI Programme 2 

As stated in the health vote, the aim of this programme is to achieve universal health coverage by improving the quality and coverage of health services through the development and implementation of policies and health financing reforms.

 Objectives

• Expand access to chronic medication by ensuring that 4.1 million stable patients actively receive medication through the central chronic medicine dispensing and distribution programme by March 2028.
• Determine a benefits package for primary health care multi-disciplinary teams (nurses and doctors) by March 2027.
• Facilitate the implementation of national health insurance by establishing ministerial advisory committees in preparation for the National Health Insurance Fund by March 2027.

Sub-programmes 

• Programme Management provides leadership to improve access to high-quality health care services by developing and implementing universal health coverage policies and health financing reform.
• Affordable Medicine is responsible for developing systems to ensure the sustained availability of and equitable access to pharmaceutical commodities. This is achieved through the development of governance frameworks to support the selection and use of essential medicines, the development of standard treatment guidelines, the administration and management of pharmaceutical tenders, the development of provincial pharmaceutical budget forecasts, the reformation of the medicine supply chain, and the licensing of people and premises that deliver pharmaceutical services.
• Health Financing and National Health Insurance designs and tests policies, legislation and frameworks to achieve universal health coverage and inform proposals for national health insurance. It develops health financing reforms, including policies affecting the medical schemes environment; provides technical oversight of the Council for Medical Schemes; manages the direct national health insurance grant and the national health insurance indirect grant; and implements the single exit price regulations, including policy development and implementation initiatives in terms of dispensing and logistical fees. Activities in this sub-programme will focus increasingly on evolving health financing functions such as user and provider management, health care benefits, provider payments, digital health information, risk identification and fraud management.

These healthcare-related measures aim to improve the quality and accessibility of healthcare services, support vulnerable households, and ensure the sustainability of the public health system in South Africa.