R4.6bn?

CityPress - - Business -

Na­tional Trea­sury’s bailout of SAA could ac­tu­ally have amounted to R4.6 bil­lion, rather than R2.3 bil­lion, if the gov­ern­ment guar­an­tee had not been re­duced by R2.3 bil­lion.

This is be­cause Fi­nance Min­is­ter Malusi Gi­gaba made no an­nounce­ment about re­peal­ing or lim­it­ing the guar­an­tee so that SAA would not be able to bor­row a fur­ther R2.3 bil­lion from an­other in­sti­tu­tion.

Charl Kocks of Rat­ings Afrika says Trea­sury and SAA have kept the word­ing of the guar­an­tees un­der wraps.

“If the guar­an­tees that gov­ern­ment has granted with the cash set­tle­ment of the debt at Stan­dard Char­tered to date re­main valid, SAA could again bor­row against the guar­an­tee,” said Kocks.

SAA has R19.1 bil­lion in guar­an­tees from the Na­tional Trea­sury.

This means that the be­lea­guered air­line used R2.3 bil­lion to pay off a debt with Stan­dard Char­tered Bank, and in do­ing so, freed up R2.3 bil­lion in gov­ern­ment guar­an­tees to bor­row again. Hence, the bailout to SAA would be R4.6 bil­lion. Trea­sury did not re­spond to en­quiries sent to them by City Press’ sis­ter news­pa­per, Rap­port.

This week, Gi­gaba main­tained that the bailout was “fis­cally neu­tral” - a ref­er­ence to the fact that gov­ern­ment did not im­me­di­ately have to bor­row money or tin­ker with taxes to make the pay­ment.

How­ever, warns Leon Claassen, an an­a­lyst at Rat­ings Afrika, the step is neu­tral only for as long as SAA’s guar­an­tee is ac­cord­ingly re­duced and it can­not bor­row fur­ther to pay for cur­rent ex­penses.

Al­though Trea­sury did not men­tion the amount of the bailout in its ini­tial state­ment, it was re­vealed in Par­lia­ment that this would to­tal about R2.3 bil­lion. –

Gib­son Erika

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