More money to SOEs

Staff Writer | Jul 24, 2019
The Special Appropriation Bill will open the way for more support to be extended to South Africa’s state-owned enterprises (SOEs), says finance minister Tito Mboweni.

The law will enable the government to ‘use the contingency reserve account to provide support to the SABC, to Denel and SAA,’ Mboweni said.

The bill has been controversial as it makes provision for R26 billion to be paid to Eskom in 2019/2020 and R33 billion in 2020/2021. This is on top of R23 billion announced for the utility in February.

Mboweni conceded that ‘we are facing a very serious financial situation.’

He indicated that the money provided to the country’s SOEs would be tied to conditions and be dependent on improving performance. However, concerns were expressed that in the Eskom matter – while the bill allows allocations to be stopped if the utility is in breach of its conditions – no actual conditions are specified.

The implications of the state of the country’s SOEs for South Africa’s economic health have been a significant concern for some years. Key to the government’s conception of its ‘developmental state’, they have frequently been marred by mismanagement and corporate governance failings. The debt they have accumulated has been flagged as a significant threat to the country’s fiscal stability.

 

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