South Africa 12.8.2018 11:45 am

State’s ‘R59bn plan’ to bail out Sanral, SAA, SABC will ‘lead to ratings downgrade’

President Cyril Ramaphosa. Picture: AP

President Cyril Ramaphosa. Picture: AP

It was reported on Sunday that cabinet is planning to save faltering parastatals yet again, raising the country’s debt liability even further.

The Sunday Times has reported that the financial woes at some of South Africa’s parastatals will once again see taxpayers coughing up to save them.

Government sources told the paper that the ANC’s cabinet lekgotla resolved last week to rescue the struggling entities, which are at risk of defaulting on their debts, or even collapsing as going concerns.

The SA National Roads Agency (Sanral) is reportedly due to get cash, as it can’t borrow any more; the SABC and SAA will get a government guarantee; while the SA Post Office will get money and guarantees.

Sanral has been particularly hard hit by road users boycotting the largely failed and massively unpopular e-tolls scheme, which even the ANC in Gauteng has turned its back on ahead of elections.

Commenting on the report on Sunday, the DA’s shadow deputy minister of finance, MP Alf Lees, said the plan would simply worsen the country’s “precarious debt levels and negatively impact South Africa’s national sovereign ratings”.

“Cabinet’s argument that a Sanral default will affect sovereign ratings is flawed because a government guarantee of R59 billion will increase the state’s debt liabilities to 60% of GDP, which is sure to induce a sovereign credit downgrade.

“It is somewhat surprising that the report seems to ignore the other elephant in the room – the contingent liability in the form of Eskom debt and government guarantees that, according to the Eskom corporate plan, will increase from R235 billion to R600 billion over the next three years.”

Lees said he would write to the chairperson of the standing committee on finance (SCOF), Yunus Carrim, to request that the fiscal liability committee and the asset and liability management unit of National Treasury be called urgently to address the SCOF on the full extent of sovereign liabilities, contingent liabilities and current applications for government guarantees and cash bailouts.

Communications Minister Nomvula Mokonyane, speaking in her capacity as spokesperson for cabinet, reportedly said it was premature to comment on discussions about the rescue package before it was formally discussed in a cabinet meeting.

Sanral confirmed they had made a plea to government for financial assistance.

Outa CEO Wayne Duvenage said Sanral needed R2 billion a year just to service its debts.

 

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