No help this time for state-owned entities
Finance Minister Enoch Godongwana did not allocate new bailouts to state-owned enterprises (SOEs) which, he said, have failed to implement their turnaround plans.
This resulted in deteriorating profitability, an increased need for guarantees in order to borrow, and more requests for bailouts.
“While the financial position of state-owned companies rebounded after the Covid pandemic, the tough economic environment and historically poor operational performance meant that their overall financial position deteriorated in 2022-2023,” he said yesterday.
To address this, the Eskom debt relief arrangement was introduced, the SA Post Office was placed in business rescue and a guarantee framework agreement was concluded for Transnet.
The South African Post Office, which has reported net losses for the past 10 years, was also placed in business rescue on 10 July as it is insolvent and cannot pay creditors or meet statutory obligations.
The Post Office was allocated R2.4 billion in 2022 to fund its business rescue process.
In 2022-2023, Eskom generated a loss of R24 billion and continues to rely on government support for liquidity.
Denel, which was allocated R3.4 billion in 2022 for its turnaround plan and sustainability, has, to date, drawn down R2.2 billion of the package to “settle statutory obligations and legacy debt obligations, and to fund working capital requirements”.
The balance of R1.2 billion has been ring-fenced and will be accessible once Denel improves its financial situation.
In December 2023, government provided a R47 billion guarantee to Transnet to assist with maturing debt and the implementation of a recovery plan.
It reported a net loss of R5.7 billion for 2022-2023.
“Insufficient revenue collection and high operating costs continue to reduce the cash available to fund business operations,” Godongwana said.
“These bailouts erode policy space as they require the redirection of resources from key public service priorities such as education, public safety and criminal justice, to entities that are meant to be financially self-sufficient.”