Eight things you need to know about South Africa’s fiscal position

The Institute for Economic Justice (IEJ) challenges the National Treasury's claim that South Africa is in an unprecedented fiscal crisis. The IEJ argues that current revenue shortfalls and expenditure overruns are consistent with historical norms and are partly the result of poor planning and political choices. While debt service costs are high, the IEJ asserts that debt-to-GDP ratios remain in line with peer emerging markets and that indiscriminate budget cuts would hinder economic growth and worsen long-term fiscal stability.

• The National Treasury's characterization of South Africa's fiscal position as a 'crisis' or 'fiscal cliff' is misleading, as current revenue shortfalls and expenditure overruns are not unprecedented. Revenue deviations between 2016/17 and 2019/20 ranged from R33-billion to R70-billion, and overspends between 2019/20 and 2022/23 ranged from R27-billion to R60-billion.
• Revenue for 2023/24 is projected to grow by only 0.55%, missing the Treasury's 4% target by R54.2-billion. This shortfall is attributed to the slowing commodity boom affecting the mining sector, the impact of load shedding, and a decision to cut the corporate income tax rate, which decreased revenues without increasing investment.
• Government expenditure overruns in 2023/24, estimated between R67.8-billion and R105.8-billion, are largely due to inadequate initial planning. Specifically, the Treasury budgeted for a 1.2% public sector wage increase while inflation was near 7%, resulting in a final 7.5% settlement that added R37.5-billion to spending. Additionally, R26-billion in 'unfunded budget submissions' for provincial health and education were not initially accommodated.
• South Africa's debt-to-GDP ratio of 71.4% in 2022/23 is comparable to the 69% average for emerging market and middle-income countries. While the deficit may reach -6.29% (comparable to 2019/20), the IEJ notes that covering the full revenue shortfall and expenditure overrun with borrowing would only increase the gross debt-to-GDP ratio by approximately two percentage points.
• Despite stable debt levels, the cost of servicing that debt is unusually high compared to peer countries. This is driven by investors demanding higher returns due to low economic growth expectations, a decline in demand for emerging economy financial assets since 2022, and a high proportion of expensive, long-term debt.

APA

Tamukamoyo, L. M. A. D. H. (2023). Eight things you need to know about South Africa’s fiscal position. Institute for Economic Justice. https://iej.org.za/press-room/in-the-media/eight-things-you-need-to-know-about-south-africas-fiscal-position/

Chicago

Tamukamoyo, Liso Mdutyana and Dr Hamadziripi. Eight things you need to know about South Africa’s fiscal position. Institute for Economic Justice, 2023. https://iej.org.za/press-room/in-the-media/eight-things-you-need-to-know-about-south-africas-fiscal-position/.

Wikipedia

{{cite report |last1=Tamukamoyo |first1=Liso Mdutyana and Dr Hamadziripi |title=Eight things you need to know about South Africa’s fiscal position |publisher=Institute for Economic Justice |date=12 October 2023 |url=https://iej.org.za/press-room/in-the-media/eight-things-you-need-to-know-about-south-africas-fiscal-position/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tamukamoyo2023eight, author = {Tamukamoyo, Liso Mdutyana and Dr Hamadziripi}, title = {{Eight things you need to know about South Africa’s fiscal position}}, institution = {Institute for Economic Justice}, year = {2023}, month = oct, url = {https://iej.org.za/press-room/in-the-media/eight-things-you-need-to-know-about-south-africas-fiscal-position/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }