More money for Eskom, as Mboweni questions need for state-owned enterprises
Finance Minister Tito Mboweni questioned the need for state-owned enterprises during his maiden budget speech in the National Assembly on Wednesday.
Mboweni talked tough on the cash-strapped entities, saying further government guarantees would only be offered on the condition of the appointment of an independent Chief Reorganisation Officer (CRO).
"Isn't it about time the country asks the question: do we still need these enterprises? If we do, can we manage them better? If we don't need them, what should we do?" Mboweni asked.
“The SOEs pose very serious risks to the fiscal framework. Funding requests from SAA, SABC, Denel, Eskom and other financially challenged state-owned enterprises have increased, with several requesting state support just to continue operating."
ALSO READ:Hill’s Pet recalls canned dog food
Government will nevertheless provide R69-billion over the next three years to the power utility to support the proposed unbundling into generation, transmission and distribution.
"This plan will send the electricity market on a new trajectory and allow for more competition, transparency and a focused funding model. Pouring money directly into Eskom at its current form is not sustainable," Mboweni said.
He reiterated that the government will not be taking on the power utility’s debts.
"Eskom took debt in the first place, it must ultimately replace it. We are setting aside R23 billion a year to financially support Eskom during its reconfiguration."
LISTEN HERE:
Mboweni said economic growth is forecast at 1.5% for 2019, increasing to 2.1% in 2021.
“In this coming year, we expect revenues of R1.58 trillion and spending of R1.83 trillion. That means we will spend R243 billion more than we earn. Put another way, we are borrowing about R1.2 billion a day, assuming that we don’t borrow money on the weekend. This coming year, interest expenditures will be R209.4 billion. This is R1 billion per day.
“The expenditure and tax adjustments are designed to largely counteract the additional allocation for Eskom and the revenue shortfall. As a result, gross national debt will still stabilise at about 60 per cent of GDP in 2023/24, broadly in line with our October forecast.“