Catastrophic rail losses just the tip of the iceberg

THE HAVOC wreaked by Covid-19 has left no business unscathed, with the Passenger Rail Agency of South Africa (Prasa) the latest entity to feel the wrath of the virus.

The agency announced yesterday it would post a loss of R757million for the year. For April and May alone the loss amounts to R200m.

Prasa’s rail stock has been halted following the coronavirus lockdown implemented five weeks ago, severely affecting its operations.

The real cost of the damage caused by Covid-19 continues to mount every day and the government has to come up with serious measures to contain the situation.

Already other entities are buckling under the pressure too, with the need for more resources being thrown to them as well.

The emergency budget to be tabled by Finance Minister Tito Mboweni, on a date yet to be determined, will help shed light on the real extent of the financial catastrophe on all entities.

This adds to the country’s woes as it was already undergoing recession and facing jobs cuts in some sectors of the economy, even before the lockdown began.

Economists have predicted a spike in unemployment with the figures set to soar well above 30%. This is a challenge for the state, which is facing increasing pressure to deliver services.

Nobody planned for the pandemic, but its consequences are dire and continue to derail a number of projects that would have eased the financial strain on the state’s resources.

The economics cluster of ministers will have to come up with viable measures to prevent more job losses in state entities. The jobs bloodbath was already being felt early in the year when some companies announced cutbacks.

This is the biggest challenge ever faced by any government in the past century. Whatever the measures to be taken, they would have to ensure no further job cuts happen, both in the public and private sectors.

The economy is not likely to grow for the foreseeable future, but the people cannot wait for economic growth to feed themselves.

Prasa is not alone in this financial crisis, and it is up to the state to provide support to get these companies out of trouble.

The loss of hundreds of millions by the rail agency is just the tip of the iceberg of many more problems.