Overview
This latest policy brief from the IEJ, Fiscal Pathways to a UBIG, we consider the results of a recent, joint IEJ and Applied Development Research Solutions (ADRS) modelling exercise. The exercise was undertaken to comprehensively evaluate the macroeconomic impacts of three different fiscal pathways to progressively realising a (U)BIG in South Africa.
These three different fiscal pathways constitute low-, medium-, and high-ambition scenarios to expanding and improving the existing SRD grant into a BIG over the medium-term (2023-2030).
The scenarios were developed drawing on our previous policy work on designing and financing a BIG in South Africa. The modelling was conducted by ADRS using their Dynamically Integrated Macro-Micro Simulation Model (DIMMSIM), evaluates the effects on economic indicators like growth, poverty, inequality, and unemployment.
Findings
The findings, expanded on by us in the policy brief, Fiscal pathways to a UBIG, suggest that funding a BIG through progressive taxation is financially viable and sustainable. The programme could significantly reduce poverty and inequality, potentially cutting the poverty rate by two-thirds and hastening the decline of income inequality compared to a baseline scenario. It could also boost GDP growth to a moderate level and lower unemployment. The modelling shows that it is possible to sustainably finance BIG through a progressive mix of financing measures.