THE National Treasury has been asked to publish a list of all state-owned enterprises (SOEs) by October so that a determination can be made on which ones should be disposed of.
The Fiscal Cliff Study Group yesterday told Parliament it was concerned about the high level of government support for non-performing SOEs in light of no return on investment.
The study group led by the head of Wits University’s School of Economics and Business Sciences, Professor Jannie Rossouw, said it was stressing that the government did not have stock of how many companies it owned.
Rossouw told the joint meeting of the Standing and Select committees on Finance in Parliament that the overwhelming support of SOEs was weighing heavily on the fiscus.
“I want to stress the point that South Africa is becoming a republic of state-owned enterprises given the fiscal challenges emanating from SOEs and the repeated funds given to SOEs over many years,” Rossouw said.
“It is for us a major concern, however, that we cannot find a complete list of all SOEs in South Africa. Some sources claim there are 132, other sources claim there are 712. We simply don’t know.”
Rossouw said their task had been challenging even though they had an estimate of the number of SOEs.
“Nevertheless, we cannot do a proactive review of these SOEs to see where the next problematic one might be waiting, the next one that will ask the funds from the fiscus,” he said.
“We, therefore, make a strong recommendation that the National Treasury should publish a complete list with at least the names of all SOEs with the next medium-term budget policy statement in October so that we can analyse the SOEs and know which ones we have in South Africa.”
The group also reiterated its warning that Treasury needs to refrain from helping non-essential failed SOEs such as Alexkor, Denel, SA Express, and South African Airways.
Investors have increasingly expressed unwillingness to extend capital to such entities without the government guarantees over the past 12 months.
The study group said SOEs should also reduce the remuneration and bonuses of executives and that the civil service wage restraint must be retained.
Dr Fanie Joubert said the longer-term outlook for fiscal cliff barometer remained worryingly in an upward direction, galloping towards a fiscal cliff.
The fiscal cliff is the point where civil service remuneration, social assistance payments and debt-service costs will absorb all government revenue.
Joubert said these three costs would take up to 74.7 percent of all tax revenue in terms of the February 2022 Budget, up from 55 percent in 2007/08.
“South Africa has been running historically large deficits, 4.5 percent of GDP, during the last decade,” he said.
“The reality is that South Africa has reached its fiscal cliff, thus making it appear as if measures similar to austerity are being implemented.”
In his Budget speech last month, Finance Minister Enoch Godongwana cited the continued requests for financial support from financially distressed SOEs as one of three risks to the fiscal outlook.
Godongwana said Treasury would reduce the continual demands on the country’s limited public resources from SOEs by showing them “tough love”.
BUSINESS REPORT ONLINE