Put a stop to planned budget cuts before they harm SA

A coalition of civil society organisations and policy analysts opposes the South African National Treasury's plan for immediate, indiscriminate budget cuts to address revenue shortfalls and expenditure overruns. The authors argue that such cuts would stifle economic growth, worsen unemployment and hunger, and fail to reduce debt-to-GDP ratios. They propose alternative solutions, including drawing on the SA Reserve Bank's gold and foreign exchange contingency reserve account, reducing tax breaks for high earners, and implementing a wealth tax, while calling for a transparent, evidence-based budget review process over 12 months.

• The authors contend that the National Treasury's planned budget cuts are based on a mischaracterisation of the current financial situation as an imminent "fiscal crisis" and that these cuts would negatively impact the most vulnerable, specifically women and children, while hindering debt repayment due to economic contraction.
• The document argues that the current revenue shortfall of R53bn is not abnormally large and is comparable to previous shortfalls, such as R61bn in 2017/18, R58bn in 2018/19, and R70bn in 2019/20, and is significantly lower than recent windfalls of R241bn and R123bn.
• South Africa's debt-to-GDP ratio was 71.4% in 2022/23, which is close to the emerging market and middle-income country average of 69%, although South Africa's interest payments as a percentage of GDP (5%) are significantly higher than the 2% average for upper-middle income countries in 2022.
• To resolve budget mismatches without cuts, the authors suggest drawing on the R459bn in the SA Reserve Bank’s gold and foreign exchange contingency reserve account, reducing tax breaks for those earning above R750,000 per year to potentially raise R83bn, and exploring a wealth tax.
• The document cites research indicating that fiscal contractions larger than 1.5% of GDP can cause a negative effect of more than 3% on GDP even after 15 years, and that IMF research suggests fiscal consolidations do not, on average, reduce debt-to-GDP ratios.

APA

Zondo, G. I. P. P. A. V. D. H. P. G. N. M. P. L. N. (2023). Put a stop to planned budget cuts before they harm SA. Institute for Economic Justice. https://iej.org.za/press-room/in-the-media/put-a-stop-to-planned-budget-cuts-before-they-harm-sa/

Chicago

Zondo, Gilad Isaacs, Pundy Pillay, Alex van den Heever, Pregs Govender, Neva Makgetla, Pali Lehohla, Nomzamo. Put a stop to planned budget cuts before they harm SA. Institute for Economic Justice, 2023. https://iej.org.za/press-room/in-the-media/put-a-stop-to-planned-budget-cuts-before-they-harm-sa/.

Wikipedia

{{cite press release |last1=Zondo |first1=Gilad Isaacs, Pundy Pillay, Alex van den Heever, Pregs Govender, Neva Makgetla, Pali Lehohla, Nomzamo |title=Put a stop to planned budget cuts before they harm SA |publisher=Institute for Economic Justice |date=17 October 2023 |url=https://iej.org.za/press-room/in-the-media/put-a-stop-to-planned-budget-cuts-before-they-harm-sa/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{zondo2023put, author = {Zondo, Gilad Isaacs, Pundy Pillay, Alex van den Heever, Pregs Govender, Neva Makgetla, Pali Lehohla, Nomzamo}, title = {{Put a stop to planned budget cuts before they harm SA}}, publisher = {Institute for Economic Justice}, year = {2023}, month = oct, url = {https://iej.org.za/press-room/in-the-media/put-a-stop-to-planned-budget-cuts-before-they-harm-sa/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }