Business 19.9.2016 07:15 am

‘Gordhan lost credibility by giving SAA R5bn guarantee’

Finance Minister Pravin Gordhan. Picture: Neil McCartney

Finance Minister Pravin Gordhan. Picture: Neil McCartney

‘We have heard what FutureGrowth had to say – they made that decision after SAA’s guarantee,’ says an economist.

Economist Dawie Roodt said Minister of Finance Pravin Gordhan had lost credibility by signing off on a R5 billion guarantee to save SAA earlier this month.

“I have spoken to top analysts and international journalists who said he lost credibility by giving SAA a guarantee with [board chairperson Dudu] Myeni still there. We have heard what FutureGrowth had to say – they made that decision after SAA’s guarantee. Moody’s also made its announcement on state entities after that. I have a suspicion these agencies waited to see what Gordhan would do and he failed that test,” he said.

Roodt was referring to a decision last month by private lender FutureGrowth to stop lending to six state entities. The firm cited several reasons, including concerns about how they were being run, government infighting and threats to the independence of the finance ministry.

Roodt also offered his take on what questions should be asked at the parliamentary meeting tomorrow.

“I would look at what impairments have not been reported on the financial statement. If you write down a huge amount of money, it means someone has made a big mistake by spending that amount of money.

“More importantly, I would want to know about the total outstanding guarantees for SAA and how much of these guarantees have already been used.

“What is the nature of those guarantees and how much interest is still owed to the state?”

More fingers are likely to be pointed at Gordhan tomorrow, an analyst says, as the SAA board prepares for a parliamentary cross-examination following the release of its financial results, which sparked more controversy around Myeni.

The troubled state entity finally released its long-awaited preliminary financial results for the 2014/15 financial year just ahead of its deadline. Yesterday, the DA blasted the airline for “heavy reliance on the government-backed guarantees”, saying the results left more questions than answers.

In a list of questions tabled by DA finance spokesperson Alf Lees, the party planned to ask Myeni about the operational plan to avoid more government guarantees, how SAA planned to “release” government from R19 billion in government guarantees so far and whether Myeni would continue to act as de facto CEO while simultaneously being chairperson of the board.


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