Mid-term budget: Treasury provides no additional funding for struggling SOEs

National Treasury has provided no additional funding in this year’s Medium-Term Budget Policy Statement (MTBPS) for the country’s embattled state-owned enterprises (SOEs).

This was announced by Finance Minister Enoch Godongwana on Thursday in the National Assembly during the tabling of his maiden MTBPS.

“The exception to this is where guarantees have been called by creditors and conditions have been met by the SOEs in question, within the context of their strategic importance,” Godongwana said.

He said SOEs, which are intended to be key enablers of economic development, had been badly managed and failed to deliver on their mandate.

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The minister said in many instances, parastatals had also been devastated by state capture, making them increasingly reliant on the state for support and bailouts.

“Since 2013, government directed more than R290 billion to bailout state-owned companies, at the expense of important social expenditure,” he said.

Godongwana said moving forward, the restructuring of SOEs would be informed by an assessment of their strategic relevance and importance.

He also warned that South Africans should be prepared to”consolidate some of our state-owned entities and let go of those that are no longer considered strategically relevant”.

Pension Funds

On the tabling of an amendment bill to allow workers to withdraw a portion of their retirement savings from their pension funds, Godongwana said retirement reforms would require legislative changes and further consultation.

He said National Treasury would soon publish a discussion document on the details of this proposal to obtain inputs before further announcements are made in the 2022 Budget Speech.

“We are proposing measures to boost household savings by increasing preservation before retirement and to increase flexibility through partial access to retirement funds through a “two-pot” system.

“In terms of this system, individuals would be able to access contributions to the one pot, while contributions to the other pot would be saved until retirement,” he said.

As things stand, the Pension Fund Act only permits workers to get access to their pension fund savings only when they retire, resign from their jobs or when they are laid off.

Unions want this to be changed in light of the pandemic and the state of South Africa’s economy.

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