Finance Minister Tito Mboweni is turning off the taps to money-guzzling state-owned entities, telling Eskom it must first get its house in order before it gets any more help to deal with its R450 billion debt.
On Wednesday, Mboweni said SOEs would get no more free money but instead would have to apply for loans to be repaid with interest.
Bailouts for state-owned companies and the public sector wage bill are two of the biggest spending pressures on the public purse.
Mboweni said it was time for state-owned companies to be weaned off state coffers, and that the government could not continue to throw money at Eskom.
Eskom’s R26 billion bailout is part of R230 billion of support pegged over the next decade, but it could need more.
Other bailouts earmarked for other state-owned entities include R5.5 billion for SAA, R3.2 billion to the SABC, R1.8 billion to Denel and R300 million to SA Express.
The minister said Eskom must fast-track it’s unbundling into three divisions, run its plant and equipment better and improve its cash management before it could negotiate more debt relief.
Mboweni argued SAA is unlikely ever to generate sufficient cash to keep flying in its current form.
“Operational and governance interventions are required urgently. I am pleased to learn that there are conversations involving SAA and potential equity partners, which will liberate the fiscus from this Sword of Damocles.”
ECONOMISTS NOT BUYIMG MBOWENI’S MTBPS
Economists feel Mboweni missed an opportunity during his Medium Term Budget Policy Statement to lay out plans to revitalise the economy.
Mboweni said the country’s national debt had exceeded R3 trillion this year and was expected to rise to R4.5 trillion in the next three years.
In contrast to his February Budget expectation that the economy will grow at 1.5%, Mboweni said it was expected to grow at 0.5%.
Head of CPUT’s economics unit, Maarten van Doesburgh, said Mboweni skirted around the real problems facing the country.
“These are not the things that will change the economy. So, cutting wages will not have an effect on the economy.”
Economist Dawie Roodt doubts whether plans the minister outlined to address the country’s dire financial situation will come to fruition.
“The ideas and plans are the right ones to put on the table but it’s unlikely that those things will be implemented.”
Slowing growth in the compensation bill and additional revenue measures will be needed to stabilise the economy.
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