Departmental transfers funding for SAA business rescue plan

Government took a crucial decision to fund the South African Airways (SAA) business rescue plan (BRP), as prepared by SAA’s business rescue practitioners. The BRP was in response to events that put SAA in severe financial distress, writes

The 2020 Medium Term Budget Policy Statement (MTBPS) tabled a proposal to fund the implementation of the BRP with a budget of R10.5 billion. The National Treasury opted to source the funding within government departments. This is in line with the government’s fiscal consolidation stance. The funding decision affects a significant number of departments, although their contributions differ in size.

The research brief gives an overview of how much each department contributes to the R10.5 billion budget for the implementation of the BRP. The brief has the following two sections:

• Section 1 tabulates each department’s contribution.

• Section 2 concludes by giving a quick analysis of focal points and pertinent issues.

Section 1: A breakdown of departmental transfers

1. Public Enterprises: R3.5 billion

2. Police: R1.2 billion

3. Higher Education and Training: R1.1 billion

4. Basic Education: R275.9 million

5. Cooperative Governance: R255.4 million

6. Transport: R681.3 million

7. Health: R694.2 million

8. National Treasury: R362.3 million

9. Human Settlements: R345.4 million

10. Correctional Services: R308.2 million

11. Public Works and Infrastructure: R234.3 million

12. Water and Sanitations: R200.9 million

13. Justice and Constitutional Development: R194.6 million

14. Trade, Industry and Competition: R109.5 million

15. Agriculture, Land Reform and Rural Development: R171.5 million

16. Home Affairs:

R98.3 million

17. Environment, Fisheries and Forestry:

R95.8 million

18. Mineral Resources and Energy: R91.3 million

19. Science and Innovation: R87.1 million

20. Sports, Arts and Culture: R55.9 million

21. Military Veterans: R54.2 million

22. Statistics South Africa: R45 million

23. Employment and Labour: R39.8 million

24. Communication and Digital Technologies: R38.5 million

25. International Relations and Cooperation: R28.7 million

26. Small Business Development: R27.4 million

27. Public Service and

Administration: R21.6 million

28. Tourism: R17.2 million

29. Women, Youth and Persons with Disabilities: R7.5 million

30. The Presidency:

R6.7 million

31. Government Communication and Information System: R5.9 million

32. National School of Government:

R2.2 million

33. Traditional Affairs: R1.9 million

34. Civilian Secretariat for the Police Service: R1.7 million

Section 2: A quick analysis of focal points and pertinent issues

In response to the government’s decision to fund the SAA business rescue plan (BRP), the National Treasury opted to source the funding within government departments as part of its fiscal consolidation plans. This affects a significant number of departments, although their contributions differ in size. The biggest contribution is from departments such as Public Enterprises (R3.5 billion), Police (R1.2 billion) and Higher Education and Training (R1.1 billion).

The National Treasury, in consultation with line departments, has made all the important considerations; but the final decision rests with Parliament.

It is crucial then that Parliament fully understands the circumstances, context and potential implications surrounding the proposed method of the implementation of the BRP. Parliament should have indepth discussions with the National Treasury and the affected departments.