File picture: Armand Hough/African News Agency (ANA)
File picture: Armand Hough/African News Agency (ANA)

Economists slam ANC inaction on SOEs

By Siyabonga Mkhwanazi Time of article published Jan 27, 2020

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Cape Town - The ANC decision on state-owned entities has come under fire, with economists warning that Finance Minister Tito Mboweni is not going to win the fight in the ruling party to rein in SOEs.

The ANC took a decision that cash-strapped SOEs must be saved and the government needs to restructure them.

This is one of the actions to be taken with regard to embattled SAA.

The airline is battling to stay in the air after it cut a number of flights and sold nine of its Airbus planes.

Eskom is also in deep financial trouble, sitting on a huge debt.

Mboweni has said investors have indicated at the World Economic Forum they want the government to fix ailing SOEs, particularly Eskom.

In addition, they want fiscal sustainability. The country’s debt has spiralled out of control, sitting at close to 70% of the GDP.

Dawie Roodt, a chief economist at Efficient Group, and Iraj Abedian, of Pan African Capital, said yesterday the ANC’s decision was driven by ideology more than facts and the financial positions of the entities.

Roodt said everything has come to an end at SAA.

“I don’t think the ANC understands business rescue. The same goes for all other SOEs,” said Roodt.

He said the ruling party was divided and these divisions were evident.

He said the state did not have enough money, but the ANC was insisting on bailing out SOEs.

“Clearly, there is no money. The second clash is, who is going to win this fight? Tito Mboweni is not going to win this fight,” said Roodt.

“Ideologically, the ANC wants these SOEs to survive. It means more guarantees and more taxes. What I think will happen in the Budget next month is that the fuel levy, sin taxes and the income tax will all go up.”

Abedian reiterated that National Treasury did not have money.

“The National Treasury has to balance the books,” he said.

“If Treasury is scrambling for R2 billion for SAA you know how empty the coffers are.

“Mboweni is going to say in the Budget ‘we are not going to do more than this. We will support the SOEs to the extent we can. They have to restructure,” said Abedian.

The ANC has insisted that it would not allow privatisation.

This is the position that has been pushed by Cosatu and other unions.

Cosatu said despite of what is going on at SOEs, the government needs to ensure there were no job losses and no privatisation.

This fight began at the time the government was talking about the unbundling of Eskom.

Political Bureau

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