IEJ statement: claims that South Africa is heading towards a fiscal crisis are exaggerated

The Institute for Economic Justice (IEJ) asserts that South Africa's current revenue shortfall and expenditure overspend are within historical norms and do not constitute a 'fiscal crisis'. The IEJ estimates a revenue shortfall of R67.2 billion and an expenditure overspend of R67.9 billion for 2023/24, noting that the debt-to-GDP ratio of 71.4% in 2022/23 is comparable to the emerging market average of 69%. The document warns that indiscriminate budget cuts exceeding 1.5% of GDP could cause significant economic contraction. To resolve budget mismatches without austerity, the IEJ suggests utilizing the Reserve Bank’s Gold and Foreign Exchange Contingency Reserve Account, increasing short-term borrowing, removing tax breaks for high-income earners and corporates, and restructuring Eskom debt.

• The IEJ contends that the current fiscal situation in South Africa is not an acute crisis, as the projected revenue shortfall of R67.2 billion for 2023/24 is consistent with shortfalls seen between 2017/18 and 2019/20, which ranged from R58.2 to R70.1 billion.
• South Africa's debt-to-GDP ratio was 71.4% in 2022/23, which the IEJ describes as being in line with the 69% average for middle-income and emerging market countries during the same period.
• The document warns that aggressive fiscal contraction can lead to long-term GDP decline, stating that cuts larger than 1.5% of GDP can result in a negative effect of over 3% on GDP even after 15 years, increasing to 5.5% for contractions exceeding 3%.
• The IEJ proposes several alternatives to budget cuts to address the 2023/24 mismatch, including accessing the R459 billion in the Reserve Bank’s Gold and Foreign Exchange Contingency Reserve Account and removing tax breaks for individuals earning above R750,000, which could raise R83 billion.
• The IEJ suggests further fiscal reforms such as restoring the corporate income tax rate to 28%, renegotiating Eskom debt, and shifting borrowing from ultra-long-term to cheaper medium-term debt.

APA

Isaacs, G., & Mncube, Z. (2023). IEJ statement: claims that South Africa is heading towards a fiscal crisis are exaggerated. Institute for Economic Justice. https://iej.org.za/press-room/statements/iej-statement-claims-that-south-africa-is-heading-towards-a-fiscal-crisis-are-exaggerated/

Chicago

Isaacs, Gilad, and Zimbali Mncube. IEJ statement: claims that South Africa is heading towards a fiscal crisis are exaggerated. Institute for Economic Justice, 2023. https://iej.org.za/press-room/statements/iej-statement-claims-that-south-africa-is-heading-towards-a-fiscal-crisis-are-exaggerated/.

Wikipedia

{{cite press release |last1=Isaacs |first1=Gilad |last2=Mncube |first2=Zimbali |title=IEJ statement: claims that South Africa is heading towards a fiscal crisis are exaggerated |publisher=Institute for Economic Justice |date=2 October 2023 |url=https://iej.org.za/press-room/statements/iej-statement-claims-that-south-africa-is-heading-towards-a-fiscal-crisis-are-exaggerated/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{isaacs2023iej, author = {Isaacs, Gilad and Mncube, Zimbali}, title = {{IEJ statement: claims that South Africa is heading towards a fiscal crisis are exaggerated}}, publisher = {Institute for Economic Justice}, year = {2023}, month = oct, url = {https://iej.org.za/press-room/statements/iej-statement-claims-that-south-africa-is-heading-towards-a-fiscal-crisis-are-exaggerated/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }