Economists weigh in on Eskom debt take-over ideas for Budget

Minister of Finance Enoch Godongwana will be presenting his annual Budget today. Picture: Phando Jikelo/African News Agency (ANA)

Minister of Finance Enoch Godongwana will be presenting his annual Budget today. Picture: Phando Jikelo/African News Agency (ANA)

Published Feb 22, 2023


Cape Town - Economists say Finance Minister Enoch Godongwana, presenting his annual Budget today, faces a colossal conundrum in how he manages the take-over of Eskom debt.

Godongwana is dangling a windfall to dole out to departments and State-owned entities – as he announced in his October medium-term budget policy statement or mini-budget – that the government had revised up by R83.5 billion to R1.68 trillion in its gross tax revenue collection.

All eyes will be on him at City Hall today on how he divvies up the pie.

Godongwana is expected to deliver a definite decision on the R350 social relief of distress grant and/or the basic income grant, a partial takeover of Eskom’s Achilles heel, its R400bn debt, among other things.

Economists said they don’t expect significant tax increases, except on excise or sin taxes.

Former Treasury economist Andrew Donaldson, who is now a research associate at the Southern Africa Labour and Development Research Unit (Saldru) at UCT, said a “substantial shift of debt” needed medium-term Budget Policy Statement to be made to put Eskom on a viable financial footing, especially when one takes into account the plan to unbundle the power utility.

He stressed that Godongwana should not take over Eskom’s whole debt.

Economist Dawie Roodt differed and suggested that the minister should take over the debt in its entirety – on condition.

“How will he take (the debt) over? That’s the question,” Roodt said.

“I think he’s going to take chunks of it. If I were the minister I would take everything at once, but – and this is very important – it must coincide with significant restructuring of Eskom, which must mean that you sell off part of Eskom.”

Roodt said this would include recovering debt from municipalities, among other suggestions.

Donaldson and Roodt agreed on taxes, saying they don’t expect significant tax changes to be announced, other than excise duties.

Donaldson said he expects projections to be broadly in line with those Godongwana made in his mini-budget.

Donaldson said he would like to see the minister strike a balance between funding unemployment programmes and the social relief of distress (SRD) grant and/or basic income grant (BIG).

He said there might be an extension of another year of the R350 social relief of distress grant, but he added that Godongwana might be “reluctant” to commit to an all-out BIG.

Roodt said he wouldn’t be surprised by another extension of the SRD grant.

Labour butted heads with Godongwana before and after his mini-budget in October.

SA Federation of Trade Unions general secretary Zwelinzima Vavi yesterday called on Godongwana not to “implement an austerity budget”.

Congress of SA Trade Unions spokesperson Sizwe Pamla said Treasury needed to do away with “ineffectual and failing budget cuts”.

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