IEJ proposes measures to close budget shortfall

The Institute for Economic Justice (IEJ) argues that South Africa's projected budget deficit of 6.29% for 2023/24 is within historical norms and does not constitute a financial crisis. The IEJ estimates a revenue shortfall of R52.4 billion and an expenditure overrun between R67.9 billion and R105.8 billion, the latter driven largely by a R37.5 billion public sector wage bill increase. To close this gap without resorting to GDP-contracting budget cuts, the IEJ proposes utilizing the Reserve Bank's Gold and Foreign Exchange Contingency Reserve Account, increasing short-term borrowing, and raising revenue by removing tax breaks for high-income earners and corporates. The IEJ warns that fiscal contractions larger than 1.5% of GDP can lead to long-term negative effects on GDP and urges the protection of social programmes like the Social Relief of Distress grant.

• The IEJ projects a revenue shortfall of R52.4 billion for 2023/24, which it considers to be within historical norms, noting that shortfalls between 2017/18 and 2019/20 ranged from R58.2 to R70.1 billion.
• An expenditure overrun between R67.9 billion and R105.8 billion is projected for 2023/24, with R37.5 billion attributed to an unbudgeted public sector wage bill increase, leading to a projected budget deficit of 6.29%.
• South Africa's debt-to-GDP ratio of 71.4% in 2022/23 is aligned with the 69% average for emerging market and middle-income countries, suggesting the debt level is not at 'crisis' proportions, though the cost of debt and lack of growth strategy remain concerns.
• The IEJ proposes several measures to close the budget gap: utilizing the Reserve Bank's R459 billion Gold and Foreign Exchange Contingency Reserve Account, increasing short-term borrowing, and removing tax breaks for corporates and high-income earners (which could raise R83 billion for those earning above R750 000).
• Fiscal contractions exceeding 1.5% of GDP are estimated to cause a negative effect of more than 3% on GDP even after 15 years, with the drop reaching 5.5% for contractions larger than 3%.

APA

Institute for Economic Justice (2023). IEJ proposes measures to close budget shortfall. https://iej.org.za/press-room/statements/statement-iej-proposes-measures-to-close-budget-shortfall/

Chicago

Institute for Economic Justice. IEJ proposes measures to close budget shortfall. 2023. https://iej.org.za/press-room/statements/statement-iej-proposes-measures-to-close-budget-shortfall/.

Wikipedia

{{cite press release |author=Institute for Economic Justice |title=IEJ proposes measures to close budget shortfall |date=12 October 2023 |url=https://iej.org.za/press-room/statements/statement-iej-proposes-measures-to-close-budget-shortfall/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{instituteforeconomicjustice2023iej, author = {{Institute for Economic Justice}}, title = {{IEJ proposes measures to close budget shortfall}}, publisher = {Institute for Economic Justice}, year = {2023}, month = oct, url = {https://iej.org.za/press-room/statements/statement-iej-proposes-measures-to-close-budget-shortfall/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }