Tito Mboweni mulls 'liquidity' facility to end non-payments, SOE bailouts
JOHANNESBURG – Finance Minister Tito Mboweni is mulling the establishment of a liquidity facility to bring an end to the culture of bailouts and non-payments among state-owned enterprises (SOEs) as he hinted at the process of selling non-core assets, including SA Express.
Mboweni told journalists on the sidelines of his Medium-Term Budget Policy Statement (MTBPS) speech that although the facility was yet to be formalised, it was key to managing government bailouts to SOEs.
“We are creating a dedicated liquidity facility within the Treasury that would manage money appropriated from Parliament and enable us to differentiate between an equity injection by shareholders and a loan extended to SOEs. It will have a clear directive that the loans need to be repaid. There is currently confusion between equity and loans. Those days of going to Father Christmas for a bailout must come to an end,” said Mboweni.
Mboweni said he and Treasury director-general Dondo Mogajane had agreed that some of the state assets could be in private hands.
“We have time between now and February to seriously deal with these issues. Maybe the time has come for us to sell or close down SA Express, which can be an interesting study if you want to close something else,” said Mboweni.
According to the 2019 MTBPS, the government had set out to forge a sustainable plan for state-owned companies, including the disposal of non-core assets and options for private-sector participation. The 2019 Budget included R7 billion from the sale of non-core assets in 2019/20.
“There is a risk that these sales will not be completed by the end of the financial year,” said the statement. It said the government had committed to managing the massive risk to the economy and the fiscus associated with Eskom by focusing on the utility's operational viability, which had a significant impact on its debt profile.
At the same time, several large state-owned companies were in crisis as a result of governance failures and poor operational performance that had heightened their debt burdens.
“The government has increased spending to meet its obligations for guaranteed debt, but decisions are required to manage the ongoing impact of these entities on the fiscus. A programme of reforms is being enacted to strengthen governance and operations at these entities,” said the statement.
In addition to Eskom, other state-owned companies were also adding to spending pressures.
“Funding for SAA, the SABC, Denel and SA Express amounts to R10.8bn in the current year, almost the entire contingency reserve for 2019/20,” said the statement.
The statement projected that the Road Accident Fund (RAF) was likely to become the government's largest contingent liability by 2021/22, despite receiving an ever-increasing share of combined fuel tax revenues.
RAF liabilities were expected to grow to R605bn in 2022/23 from R341bn in 2019/20.