Macroeconomy

The Institute for Economic Justice (IEJ) contends that South Africa's reliance on microeconomic interventions and 'orthodox' macroeconomic policies—characterized by fiscal austerity and high interest rates—has failed to curb unemployment. The brief proposes a R500 billion fiscal stimulus and a fundamental shift in the South African Reserve Bank's (SARB) mandate to prioritize employment and growth over strict inflation targeting. It suggests various funding mechanisms for the stimulus, including increased taxation, moderate borrowing, and the use of over-capitalized pension funds. Additionally, it advocates for 'Quantitative Monetary Easing' (QME) to provide direct credit to productive sectors and the implementation of capital controls to stabilize the exchange rate and curb speculative capital flows.

• South Africa's macroeconomic policy since 1996 has been 'orthodox' and contractionary, focusing on inflation targeting and a 'market enabler' state role, which the authors argue has failed to generate large-scale, job-creating investment.
• Fiscal austerity has led to falling per capita expenditure; between 2016/17 and 2018/2019, average annual growth in real government expenditure (excluding interest) was 0.3%, while population growth was 1.6%.
• The IEJ proposes a R500 billion fiscal stimulus over three years (approximately 3% of GDP), suggesting that a third of this (R166 billion) be spent on economic infrastructure due to its high fiscal multiplier of 1.9.
• To fund the stimulus, the brief suggests allowing government debt to rise by 5 percentage points to 60% of GDP by 2019/2020, which would raise approximately R250 billion.
• The Public Investment Fund (PIC) is identified as over-capitalized by approximately R470 billion, with a funding level of 116% of its obligations, and could be used to write off government or SOE debt, such as Eskom's.
• The brief recommends an emergency interest rate cut of at least 2 percentage points and a change in the South African Reserve Bank's (SARB) mandate to prioritize employment and the expansion of productive sectors.
• The authors advocate for 'Quantitative Monetary Easing' (QME), where the SARB provides direct credit to productive economic agents and SMMEs, rather than relying solely on interest rate manipulation.
• To reduce volatility and speculative trading of rand assets, the brief proposes capital controls, including 'Tobin taxes' on financial transactions and minimum offshore borrowing or holding periods.

APA

Isaacs, G., Gqubule, D., & Nkosi, R. (2018). Macroeconomy. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf

Chicago

Isaacs, Gilad, Duma Gqubule, and Redge Nkosi. Macroeconomy. Institute for Economic Justice, 2018. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf.

Wikipedia

{{cite report |last1=Isaacs |first1=Gilad |last2=Gqubule |first2=Duma |last3=Nkosi |first3=Redge |title=Macroeconomy |publisher=Institute for Economic Justice |date=August 2018 |url=https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{isaacs2018macroeconomy, author = {Isaacs, Gilad and Gqubule, Duma and Nkosi, Redge}, title = {{Macroeconomy}}, institution = {Institute for Economic Justice}, year = {2018}, month = aug, url = {https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }