Budget cuts and proposed fiscal rules must be reversed to realise SONA ambitions

The Institute for Economic Justice (IEJ) contends that the National Treasury's focus on debt stabilisation through budget cuts and a proposed binding fiscal rule will hinder South Africa's goal of 3% GDP growth by 2027. The IEJ asserts that fiscal rules lack a proven causal relationship with debt outcomes and that economic growth is a more effective tool for improving debt dynamics. To achieve a sustainable fiscal path, the IEJ recommends maintaining social wage expenditure, increasing revenue by cutting tax rebates for high-income earners, and prioritising state-led investment in social and economic infrastructure.

• The IEJ argues that the current fiscal strategy of budget cuts and a narrow focus on debt stabilisation is incompatible with the President's target of 3% GDP growth by 2027 and the Government of National Unity's (GNU) vision for inclusive growth.
• The National Treasury achieved a primary budget surplus in 2024 through significant reductions in public infrastructure investment and the social wage, yet it has not provided evidence of the impact of this strategy on economic growth or conducted a human rights impact assessment.
• Analysis by the IEJ suggests that binding fiscal rules are an ineffective tool for debt management, as there is no evidence of a causal link between such rules and debt outcomes, whereas economic growth has proven more effective in improving debt dynamics.
• The IEJ proposes six pillars for a sustainable fiscal path, which include cutting tax rebates for the wealthy and high-income earners, maintaining social wage spending, and ensuring the state, rather than the private sector, centers investment in economic and social infrastructure.

APA

Institute for Economic Justice (2025). Budget cuts and proposed fiscal rules must be reversed to realise SONA ambitions. https://iej.org.za/wp-content/uploads/2025/02/IEJ-Statement-Budget-2025-and-Fiscal-Rules.pdf

Chicago

Institute for Economic Justice. Budget cuts and proposed fiscal rules must be reversed to realise SONA ambitions. 2025. https://iej.org.za/wp-content/uploads/2025/02/IEJ-Statement-Budget-2025-and-Fiscal-Rules.pdf.

Wikipedia

{{cite press release |author=Institute for Economic Justice |title=Budget cuts and proposed fiscal rules must be reversed to realise SONA ambitions |date=18 February 2025 |url=https://iej.org.za/wp-content/uploads/2025/02/IEJ-Statement-Budget-2025-and-Fiscal-Rules.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{instituteforeconomicjustice2025budget, author = {{Institute for Economic Justice}}, title = {{Budget cuts and proposed fiscal rules must be reversed to realise SONA ambitions}}, publisher = {Institute for Economic Justice}, year = {2025}, month = feb, url = {https://iej.org.za/wp-content/uploads/2025/02/IEJ-Statement-Budget-2025-and-Fiscal-Rules.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }