Gordhan walking on fiscal tightrope
No more ‘business as usual’
FINANCE Minister Pravin Gordhan continued his tough stance against the poor performance of state-owned entities (SOEs) by outlining key targets for guarantees, announcing that it would not be business as usual for underperforming parastatals.
Gordhan and his team from the National Treasury yesterday identified SAA, Sanral, Eskom and the SA Post Office (Sapo) as entities requiring serious attention – promising that he would continue to keep an eye on them.
Gordhan also addressed the issue of the establishment of the Presidential State-Owned Enterprises (SOE) Coordinating Council, headed by President Jacob Zuma.
Zuma denied in the National Council of Provinces (NCOP) on Tuesday that this body was duplicating the work done by the inter-ministerial committee on SOE reforms led by his deputy, Cyril Ramaphosa.
Zuma told the NCOP that the council would oversee the performance of SOEs.
In the medium-term budget policy statement (MTBPS) the Treasury said SOEs would keep their own functions.
“Following its July lekgotla, cabinet announced the decision to establish the Presidential SOE Coordinating Council.
“The council will play a monitoring and co-ordinating role. The statutory responsibilities of company boards and executive authorities as set out in the Companies Act and the Public Finance Management Act remain unchanged,” the policy document said.
The Treasury said SOEs needing financial support or guarantees would have to meet three key principles set out in the Budget Review last year, including the fact that the support had to be “consistent with sustainable public finances”.
“The capitalisation of SOEs cannot have an ‘impact’ on the budget deficit. Those entities who have been given support must show sound business plans, good governance and operational efficiencies.”
Director-general in the National Treasury, Lungisa Fuzile, also emphasised this point in the media briefing, charging that the government would not give money to SOEs without strong boards and rising revenue.
Rising revenue
The Treasury also revealed in the MTBPS document that it would ensure it stabilised entities that did not have boards.
In September, the cabinet appointed a full-strength board at SAA.
“Sapo has a new chief executive and new board after their appointments a few months ago. Sanral (SA National Roads Agency Limited) was trying to fix its problems around e-tolls by increasing collections. The recapitalisation of Eskom has improved its liquidity and profits,” the MTBPS said.