Land Bank to get additional R3bn, but nothing for other state firms
Johannesburg – The National Treasury said on Wednesday it would allocate an additional R3 billion to recapitalise the Land Bank, but said no other in-year spending adjustments were proposed for state-owned companies in budget adjustments related to the Covid-19 crisis.
In a supplementary budget review for 2020, the Treasury said the coronavirus pandemic and associated economic restrictions were expected to reduce revenues for entities such as the Airports Company South Africa, power utility Eskom and the South African National Roads Agency Limited.
"Global market volatility may further limit the ability of state-owned companies to borrow in capital markets and service their debt obligations," it said.
"The Covid-19 pandemic underlines the urgent need for broad-based reforms at state-owned companies so that they can become efficient and financially sustainable."
It said these reforms included reducing the number of and merging some state-owned companies and incorporating certain functions into the government, as well as equity partnerships, and stronger policy certainty and implementation.
Planned transfers from the fiscus would be strictly conditional on state companies improving their balance sheets.
The government envisioned a package of economic reforms that would improve productivity, lower costs and reduce the demands of state-owned companies on the public purse.
"These measures include finalising electricity determinations, unbundling Eskom and taking other steps to open up energy markets, modernising ports and rail infrastructure, and licensing spectrum," said the Treasury.
It said the failure to address long-standing governance failures, prosecute those implicated in corruption, including senior executives at state firms as well as undertaking operational reforms, had contributed to already unsustainable financial positions in many public sector institutions.
"The pressure on public finances requires fundamental changes to the manner in which government supports these institutions, and such reforms will be implemented in the near term," the Treasury said.
African News Agency (ANA)