Finance Minister Tito Mboweni. File photo: Sumaya Hisham/REUTERS.
Finance Minister Tito Mboweni. File photo: Sumaya Hisham/REUTERS.

Mid-term budget: Mboweni urged to prioritise economy, not SOE bailouts

By Siyabonga Mkhwanazi Time of article published Oct 27, 2019

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Political parties have urged Finance Minister Tito Mboweni not to give bailouts to State-Owned Entities (SOEs) when he delivers his Medium-Term Budget Policy Statement.

Mboweni is expected to make announcements on Eskom and other cash-strapped SOEs in his Wednesday’s mini-budget.

But the DA, Cope and ACDP said on Saturday Mboweni must stabilise the national debt, rein in expenditure in government departments and stop giving bailouts to SOEs.

Eskom is sitting on a huge debt and last week it was given a bailout of R59 billion.

The DA’s spokesperson on finance Geordin Hill-Lewis said they wanted Mboweni to fix the state of the economy.

“The number one thing we expect is to stabilise the national debt and the deficit does not blow up significantly and that is going to require significant cuts,” said Hill-Lewis.

The debt was approaching 60% of the Gross Domestic Product and the government spends more than R146bn a year to service the debt.

Hill-Lewis said Mboweni had to cut the public sector wage bill.

The wage bill increased from R473bn in the 2015/16 financial year to R627bn in the 2019/20 financial year.

Despite the government calling on public sector employees to take early retirement packages, there had been no uptake. The National Treasury wanted to cut the expenditure on salaries.

Hill-Lewis said the bailout of SOEs must come to an end. He said it was not correct that while there were high levels of poverty in the country the government spends billions of rand on bailouts.

The ACDP leader Reverend Kenneth Meshoe said Mboweni must stop talking about the bailout of SOEs. There were more pressing issues in the country including fixing infrastructure than giving money to Eskom.

“We are not happy that a lot of money is spent on bailouts of SOEs. Even the last money given to Eskom the minister of finance was not happy about it,” said Meshoe.

He said in the early 2000s Eskom was a profitable business but it had become reliant on bailouts, and incurring massive losses.

In the last financial year Eskom suffered a loss of R21bn and it said recently it would incur another loss of R21bn at the end of March next year, when it closes its books.

Dennis Bloem from Cope said the economy of the country was in a mess.

“There is little that the minister of finance will put on the table to change the economic situation in the country. The mere fact that last week a bailout was approved for Eskom shows that the country is in serious trouble. With all the good intentions that the minister of finance has it will be difficult to come out of this trouble,” said Bloem.

He said the issue of the national debt was a serious problem. The debt is one of the single expenditure item in the budget.

Political Bureau

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