File picture: Siphiwe Sibeko/Reuters
File picture: Siphiwe Sibeko/Reuters

#MTBPS2017: Gigaba warns SOEs to stop relying on bailouts

By Siyabonga Mkhwanazi Time of article published Oct 25, 2017

Share this article:

Parliament - Finance Minister Malusi Gigaba reined in government spending and warned state-owned entities to stop relying on bailouts.

He said SAA, Eskom and other SOEs would in future struggle to get guarantees from the government because of stringent requirements.

The government has spent more than R500 billion in the bailout of SOEs in the past few years.

On Wednesday Gigaba announced new bailouts for SAA and the South African Post Office.

Read: #MTBPS2017 : Treasury to save SAA by selling Telkom shares

He confirmed that SAA and Sapo would get a bailout of R13.7bn.

“The expenditure ceiling is threatened in the current year, as a result of government’s recapitalisation of SAA and Sapo. Government is disposing of a portion of its Telkom shares to avoid a breach, with an option to buy them back at a later stage,” said Gigaba.

He said from March next the state will decide on the assets it would sell to raise the money for the funding of SOEs.

Gigaba also told Parliament South Africa was still weathering the economic storm and it would not experience significant growth in the next two years.

This was after National Treasury revised growth from 1.7 percent growth to 0.7 percent.

He said sluggish economic growth has impacted on the revenue collection by billions of rand.

Politics Bureau

Share this article: