Spending cuts not the only way to curb economic crisis

The Institute for Economic Justice argues that the South African National Treasury is using fears of a "fiscal cliff" to justify unwise spending cuts while ignoring alternative revenue-raising strategies and the severe social consequences of austerity.

• The National Treasury is accused of orchestrating a campaign of fear regarding a "debt blowout" and "total collapse in the country’s finances" to push through unpopular spending cuts, while dismissing the possibility of raising additional revenue.
• Budget cuts in South Africa are predicted to cause the collapse of critical services and loss of life. In the Eastern Cape, as of October 2022, 1,202 out of 3,269 posts were vacant and only 447 of 671 required ambulances were operational.
• Austerity policies have historically increased inequality and poverty. Between 2002 and 2018 across 79 countries, such policies increased the incomes of the top 10% of earners at the expense of the bottom 80%. Furthermore, fiscal contractions larger than 1.5% of GDP can result in a negative effect of more than 3% on GDP even after 15 years.
• The document proposes several revenue-raising alternatives to spending cuts: removing retirement provision subsidies (potential R97bn), removing medical aid tax credits for those earning over R500,000 per annum (potential R6.4bn), and returning the corporate income tax rate from 27% to 28%.
• South Africa's debt-to-GDP ratio of 71.4% in 2022/2023 is comparable to the emerging market and middle-income country average of 69%. High debt service costs (15% of consolidated government expenditure) are driven by high local-currency debt costs (10-12% over the past two years) compared to 7-8% in other emerging markets.

APA

Isaacs, Mncube, & Mdutyana (2023). Spending cuts not the only way to curb economic crisis. Institute for Economic Justice. https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/

Chicago

Isaacs, Mncube, and Mdutyana. Spending cuts not the only way to curb economic crisis. Institute for Economic Justice, 2023. https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/.

Wikipedia

{{cite press release |last1=Isaacs |last2=Mncube |last3=Mdutyana |title=Spending cuts not the only way to curb economic crisis |publisher=Institute for Economic Justice |date=9 September 2023 |url=https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{isaacs2023spending, author = {Isaacs and Mncube and Mdutyana}, title = {{Spending cuts not the only way to curb economic crisis}}, publisher = {Institute for Economic Justice}, year = {2023}, month = sep, url = {https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }