SAA gets capital aid to stay afloat
Minister mum on how much will be injected or where money will come from
THE GOVERNMENT has reined in state-owned entities (SOEs) to stick to proper spending and improve efficiency but gave the struggling SAA capital injection to stay afloat.
Finance Minister Pravin Gordhan would not say yesterday how much SAA would receive. However, he said one of the biggest risks facing the country was SOEs.
“There is no doubt both in financial management and governance there is room for improvement,” he said.
Gordhan said SAA should get a new chief executive and chief financial officer.
“We will make equity injections, we won’t tell you where that money will come from,” said Gordhan.
The Director-General in the Treasury, Lungisa Fuzile, said in a media briefing ahead of the Budget that SAA and other SOEs required capital injection.
Fuzile said it was difficult to say how much SAA would receive.
“SAA needs a capital injection. Indications are that it will have to be substantial,” said Fuzile. “It may be given over time. The first cash injection will be in the (coming) financial year. As to the exact amount we will work it out.
“We are determined that amount is financed in a deficit-neutral way.”
In his Budget speech in the National Assembly, Gordhan said the reform of SOEs was an important area to improve governance.
He said he had a meeting with SAA last week to discuss its turnaround plan.
It appeared lenders were struggling to come on board and help SAA despite having a new board, he said.
But discussions would continue and they want to help SAA to return to a better financial and sustainable position.
He said large SOEs such as Eskom and Transnet had a key role to play in reigniting growth in the economy.
In its Budget review, the National Treasury said there had been an increase of guarantees given to SOEs.
In September SAA was given a guarantee of R4.7 billion, taking its total number of guarantees to R19.1bn.
The Land Bank received a guarantee of R4.5bn while the SA Post office netted a capital injection of R600 million.
“The R7bn guarantee to the Reserve Bank for the bailout of African Bank expired in February 2016 without being called on,” said the budget review.
“It has been replaced with a R3bn guarantee,” it added.
The budget review said the guarantees increased from R469.9bn in 2015/16 to a total of R477.7bn in the current financial year.