PRESS STATEMENT: The Budget 2021: Slashing public expenditure places the economy at risk

The Institute for Economic Justice (IEJ) issued a press statement criticizing the 2021 South African National Budget, arguing that its focus on austerity and expenditure cuts risks economic growth, exacerbates poverty, and fails to deliver on promised COVID-19 relief.

• The 2021 Budget implements a contractionary fiscal policy through expenditure cuts that the IEJ claims will reduce growth and tax revenue. Consolidated non-interest spending is projected to contract at an annual real average rate of 5.2 per cent, leading to real spending reductions in general public services, learning, culture, and health.
• The IEJ asserts that the R500 billion COVID-19 rescue package was largely illusory, as the 2020 Supplementary Budget only provided a net increase to non-interest spending of R36 billion (less than 1% of GDP). As of February 11, 2021, only R158 billion of the promised R500 billion had materialized, with significant shortfalls in job creation (R12.6 billion used of R100 billion) and credit guarantee schemes (R18 billion used of R200 billion).
• The budget is described as 'employment destroying' due to a shrinking economy and reduced funding for industrial policy. Employment creation programmes are allocated R33.4 billion in 2021/22, falling to R24 billion in 2023/4. Additionally, the promised public employment stimulus received only R11 billion in 2021/2, with no allocation for the following two years.
• Social grants are projected to decline by 2.4% in real terms. The Child Support Grant's nominal increase from R445 to R460 is below the expected inflation of 4.2%, resulting in a real decrease of 0.8% and remaining below the food poverty line of R585. Furthermore, the special COVID-19 Social Relief Distress Grant is scheduled to end in April 2021.
• The IEJ criticizes the decision to lower the corporate income tax rate, arguing it will compromise revenue and increase inequality. It suggests alternative revenue sources, such as increasing Dividend Tax to 25% to raise R7.5 billion or eliminating retirement fund contribution deductions for those earning above R1m to raise R28 billion.

APA

Institute for Economic Justice (2021). PRESS STATEMENT: The Budget 2021: Slashing public expenditure places the economy at risk. https://iej.org.za/wp-content/uploads/2021/02/IEJ-Post-Budget-2021-statement.pdf

Chicago

Institute for Economic Justice. PRESS STATEMENT: The Budget 2021: Slashing public expenditure places the economy at risk. 2021. https://iej.org.za/wp-content/uploads/2021/02/IEJ-Post-Budget-2021-statement.pdf.

Wikipedia

{{cite press release |author=Institute for Economic Justice |title=PRESS STATEMENT: The Budget 2021: Slashing public expenditure places the economy at risk |date=25 February 2021 |url=https://iej.org.za/wp-content/uploads/2021/02/IEJ-Post-Budget-2021-statement.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{instituteforeconomicjustice2021press, author = {{Institute for Economic Justice}}, title = {{PRESS STATEMENT: The Budget 2021: Slashing public expenditure places the economy at risk}}, publisher = {Institute for Economic Justice}, year = {2021}, month = feb, url = {https://iej.org.za/wp-content/uploads/2021/02/IEJ-Post-Budget-2021-statement.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }