Government to sell Telkom shares

Gigaba is presenting his maiden mid-term budget policy statement.

 

“To ensure the expenditure ceiling is not breached, we have decided to dispose of a portion of government’s Telkom shares. We do not take this decision lightly, but we have had to in order to maintain the credibility of the expenditure ceiling,” Gigaba says.

 

The decision comes as government continues to bailout struggling state-owned enterprises.

Economic growth forecast slashed to below 1%

 

Gigaba says the decision was taken in a bid to avoid an expenditure breach as a result of the financial woes at South African Airways (SAA) and the South African Post Office (SAPO).

 

Government will have the option to buy back the shares at a later stage.

 

Gigaba says sluggish economic growth has caused a significant reduction in the tax revenue outlook which has significantly eroded government’s fiscal position.

LIVE: Gigaba presents mid-term budget

 

Tax revenue is projected to fall short of the 2017 budget estimate by R50.8 billion in the current year, the largest downward revision since the 2009 recession.

 

“At the same time, additional appropriations of R13.7 billion to recapitalise South African Airways (SAA) and the South African Post Office (SAPO). These have been partially offset by use of the contingency reserve. A shortfall of R3.9 billion remains,” Gigaba says.