In the Medium-Term Budget Policy Statement (MTBPS), National Treasury projected a revenue shortfall of R54.7 billion for the 2023/24FY. The budget deficit as a proportion of Gross Domestic Product (GDP) was projected at 4.9%. Provinces across the country were mandated to embark on expenditure cuts following the country’s deteriorating fiscal outlook. Thus, this necessitated the  need to employ fiscal consolidation stance to help contain the growing government debt. For the Gauteng province as an economic hub of South Africa, this expenditure cut would have negative effect on the region’s economic activity, social and service delivery objectives.  

As a result of that it was necessary to document this research as it attempts to understand the impact of expenditure cuts to economic activity for the Gauteng province, using the Vector Auto Regression (VAR) approach. A time series data from 1998 to 2023 for three variables namely Gross Domestic Product by Region (GDPR), employment and the expenditure were used. The results of the research showed that fiscal consolidation through budget cuts for the province results in a decline in both economic activity and employment levels in both the short and the long run. Therefore, it is recommended that more variables be added in investigating the effect or fiscal consolidation or budget cuts in the province.