Budget cuts won't save South Africa

A joint statement by over 100 economists, researchers, and civil society organizations, including the Institute for Economic Justice, rejecting the austerity approach of the South African National Treasury ahead of the November 1, 2023, Medium-Term Budget Policy Statement (MTBPS). The authors argue that budget cuts exacerbate social crises and instead propose a developmental fiscal framework focused on job creation, social protection, and progressive revenue generation.

• The authors reject the 'austerity philosophy' of the National Treasury, arguing that cutting government spending on services, grants, and infrastructure will not resolve South Africa's debt trajectory or its social and growth crises. They warn that continued spending cuts could aggravate 'deep political fissures' and lead to 'social unrest'.
• The document identifies structural economic problems as the root of current crises, including monopolisation, deindustrialisation, capital intensity, and the dominance of services and finance. It asserts that fiscal challenges are driven by the 'mass exclusion' of a large segment of society from the economy, which reduces the tax base and hinders growth.
• The signatories demand several immediate fiscal interventions: closing the budget mismatch using the R459 billion in the SARB’s Gold and Foreign Exchange Contingency Reserve Account, reversing the public sector hiring freeze, and increasing the Social Relief of Distress (SRD) and Child Support Grants to the food poverty line.
• To raise additional revenue without increasing VAT, the authors propose eliminating tax breaks for those earning over R750,000 per year (potentially raising R83 billion), reversing the corporate income tax reduction from 28% to 27% (which costs R11–R13 billion annually), and removing the Employment Tax Incentive (costing R6.6 billion annually). They also suggest implementing a wealth tax, which could generate revenue equal to approximately 3% of GDP.
• The statement calls for the extension of the Public Employment Stimulus (PES), noting it supported over 1 million people between 2020 and 2023, to further combat youth unemployment and promote skills development.

APA

Institute for Economic Justice (2023). Budget cuts won't save South Africa. https://iej.org.za/press-room/statements/joint_mtbps_statement-budget_cuts_wont_save_south_africa/

Chicago

Institute for Economic Justice. Budget cuts won't save South Africa. 2023. https://iej.org.za/press-room/statements/joint_mtbps_statement-budget_cuts_wont_save_south_africa/.

Wikipedia

{{cite press release |author=Institute for Economic Justice |title=Budget cuts won't save South Africa |date=31 October 2023 |url=https://iej.org.za/press-room/statements/joint_mtbps_statement-budget_cuts_wont_save_south_africa/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{instituteforeconomicjustice2023budget, author = {{Institute for Economic Justice}}, title = {{Budget cuts won't save South Africa}}, publisher = {Institute for Economic Justice}, year = {2023}, month = oct, url = {https://iej.org.za/press-room/statements/joint_mtbps_statement-budget_cuts_wont_save_south_africa/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }