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

The Institute for Economic Justice argues that South Africa is not facing an unprecedented fiscal crisis, despite claims from the National Treasury. While revenue for 2023/24 is projected to grow by only 0.55% (missing targets by R54.2-billion) and spending is expected to exceed budgets by between R67.8-billion and R105.8-billion, the document asserts these deviations are consistent with historical norms. It contends that the overspend results from inadequate planning, specifically regarding public sector wages and essential social services. With a debt-to-GDP ratio of 71.4% in 2022/23, the document claims South Africa's debt levels are in line with emerging market averages, although debt service costs remain unusually high. The authors warn that austerity measures and budget cuts would hamper economic growth and increase long-term debt vulnerability, recommending instead a developmental fiscal policy focused on employment, poverty reduction, and productive capacity.

• The projected revenue shortfall for 2023/24 of R54.2-billion does not constitute a collapse in revenue, as it represents approximately half of the revenue collected in November 2022 alone. This shortfall is attributed to a slowdown in the commodity boom affecting the mining industry, the impact of load shedding, and a decision by the Treasury to cut the corporate income tax rate.
• Government expenditure is projected to exceed the 2023/24 budget by between R67.8-billion and R105.8-billion. The document argues this is not a failure of spending control but a failure of planning, noting that the Treasury under-budgeted for public sector wage settlements (planning for 1.2% against a final 7.5% settlement, adding R37.5-billion) and failed to accommodate R26-billion in foreseeable needs for provincial health and education.
• South Africa's fiscal situation is not an unprecedented emergency; 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. Furthermore, the 2022/23 debt-to-GDP ratio of 71.4% is comparable to the emerging market and middle-income country average of 69%.
• While debt levels are not abnormally high, 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.
• There is no immediate short-term risk of a debt crisis because nearly 90% of government debt is payable over many years in rands, reducing exposure to exchange rate fluctuations. However, the document warns that pursuing an austerity path of budget cuts could hamper growth and eventually lead to a crisis.

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} }