PUBLIC SPENDING
SA’s economy needs a booster shot, not austerity
There are three areas in which public spending in South Africa would yield positive results for the economy, reckons THOKOZILE MADONKO of Wits University and FABRIOS ANDRÉS DIAZ PABÓN from the University of Cape Town.
PUBLIC SPENDING
SA’s economy needs a booster shot, not austerity
There are three areas in which public spending in South Africa would yield positive results for the economy, reckons THOKOZILE MADONKO of Wits University and FABRIOS ANDRÉS DIAZ PABÓN from the University of Cape Town.
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FOR the past 11 years the South African government has pursued a policy of austerity (https://www.treasury.gov.za/documents/national%20budget/2024/Macroeconomic%20Policy%20Review.pdf#page=5). In recent years, government has reduced per capita spending (adjusted for inflation) by significant amounts. Spending on public services, for example, health and education, for each member of the population has fallen since 2019, from about R30,000 to about R28,000 in 2023 (https://www.wits.ac.za/media/wits-university/faculties-and-schools/commerce-law-and-management/research-entities/scis/documents/Public%20Economy%20-%20Budget%202024-%20Austerity%20Mission%20Accomplished.pdf).
National Treasury has confirmed the deterioration (https://www.treasury.gov.za/documents/national%20budget/2024/Macroeconomic%20Policy%20Review.pdf#page=5) in public spending and investment.
But the austerity approach hasn’t worked. Unsurprisingly, the government has little to show for it. Per capita debt service costs continue to constrain (https://www.treasury.gov.za/documents/national%20budget/2024/Macroeconomic%20Policy%20Review.pdf#page=5) the resources available for funding the works of the state. Government debt service costs are estimated to average R412.4 billion (https://www.treasury.gov.za/documents/national%20budget/2024/review/FullBR.pdf#page=52) per year over the next three years, which is more (https://www.treasury.gov.za/documents/national%20budget/2024/speech/English%202024%20Budget%20Speech.pdf#page=7) than other spending areas such as health and education...
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