Finance minister Malusi Gigaba says state-owned
entities’ reliance on bailouts must end.
Finance minister Malusi Gigaba says state-owned entities’ reliance on bailouts must end.
Gigaba delivered his maiden mid-term budget policy in Parliament on Wednesday.
He says: “The trend of state-owned companies seeking bailouts to finance operational expenditure, inefficiency and waste must also be brought to an end.”
At the same time, Gigaba announced the sale of government shares in Telkom to help bail out the struggling entities.
“In due course, National Treasury will make proposals to make our government guarantee framework more stringent.
“It is imperative that government ensures that the Boards of Directors in the SOCs are properly qualified, ethical and provide the requisite skill sets that will ensure that the SOCs are soundly and profitably run, to properly serve their mandates. This needs to be done without delay,” Gigaba says.
The finance minister says governance issues at Eskom are of major concern to government.
“The failures of governance, leadership and financial management Eskom are of grave concern. As government is guarantor over a significant portion of Eskom’s debt, it has become a significant risk to the entire economy. Eskom is simply too important to the country to fail, and we will not allow it to,” Gigaba maintains.
He says a team from National Treasury will work closely with the Department of Public Enterprises to address the governance, management and financial management challenges at Eskom and report back periodically.
Gigaba says a new board will be appointed at Eskom before the end of November.
“Working with the new board, we will ensure a credible executive management team is in place.
“We will ensure its financial management complies with the Public Financial Management Act (PFMA), and that irregular expenditure is accounted for.”
He says government can manage state-owned companies well, and will act decisively to stabilise those which are experiencing problems.
“Executives are paid competitive salaries for their professional expertise as business managers. The public, and indeed government as a Shareholder, are correct to expect a lot of them. As the Shareholder, we are tired of being dragged into crises by those we employ to govern and manage state-owned companies. This must end,” Gigaba stresses.
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