South Africa - Cape Town - Parliament February 26, 2020 - Minister of finance Tito Mboweni says the government is 'seized with addressing and minimising the impact of Covid-19, implementing measures to improve economic growth and setting government finances on a sustainable trajectory'. File picture: Phando Jikelo/African News Agency (ANA)
South Africa - Cape Town - Parliament February 26, 2020 - Minister of finance Tito Mboweni says the government is 'seized with addressing and minimising the impact of Covid-19, implementing measures to improve economic growth and setting government finances on a sustainable trajectory'. File picture: Phando Jikelo/African News Agency (ANA)

Some SOEs to continue receiving state funding

By Siyabonga Mkhwanazi Time of article published Apr 30, 2020

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Cape Town - The Treasury has insisted it would still inject funds to certain State-Owned Entities after they were allocated a few months ago.

This was after Finance Minister Tito Mboweni announced that a R500 billion stimulus package would be used in the fight against coronavirus.

Some of the money would be R130bn, reprioritised from the budget. The other funds would be sourced from local and international funders.

However, the National Treasury said on Wednesday the bailouts given to Eskom, SAA and Denel would not form part of the R500bn stimulus package. In the budget, the Treasury allocated R23bn to Eskom and R16bn to SAA.

“The minister outlined during the recent media engagement how the R500bn stimulus for Covid-19 will be funded and allocated to fight the pandemic. The package does not include reprioritisation of the allocations for SAA, Eskom and Denel,” National Treasury said.

Mboweni has already said Eskom is a key sector to the economy.

During load-shedding, many companies lost millions of rand. Political parties also called for the stabilisation of Eskom.

The government had said it would need R230bn in the next 10 years to keep Eskom afloat. The power utility has started a process of restructuring and this would include splitting it into three entities for generation, transmission and distribution.

Mboweni had already warned that the government would not be able to keep bailing out the SOEs.

The outbreak of the coronavirus has seen the government launch a number of interventions to stimulate the economy.

The South African economy was already on its knees after going into a technical recession and the SA Reserve Bank has already projected negative growth of 6.1% this year.

Most of the businesses had been shut down, but the easing of the lockdown from tomorrow would allow some of the businesses to go back into operation with millions of workers.

The National Treasury said the funding allocated for the SOEs a few months ago would remain in place. This would allow them to continue to operate.

The government has defended its decision to source funding from some of the international institutions.

It has warned that coronavirus would be around for a while and serious measures were needed to ensure all the necessary measures were there to contain the spread.

Political Bureau

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