Cape Town — Finance Minister Trevor Manuel yesterday justified the government's R1,6bn cash injection into South African Airways (SAA), saying the absence of such interventions could sink an enterprise which could otherwise be brought to sustainability.

He raised the problem of distinguishing between throwing good money after bad and the need to strengthen the balance sheet of an entity such as SAA, which operated in a highly competitive industry and needed to undergo a restructuring.

Opposition MPs were highly critical of the bail-out of SAA during the first reading debate on the Appropriation Bill in the National Assembly. The criticism was made more acute as it followed revelations by SAA executives in Parliament this week that the airline was due to make a significant bottom-line loss in the year to end-March and would need a further capital injection if it was to be sustainable in the long term.

Manuel also expressed the pessimistic view that the economic crisis would not be overcome in the next year or two and that it would be "a pretty long haul" for the global economy with its huge imbalances.

He warned against the "exceedingly worrying" features of the rescue package of US President Barack Obama, which he said were "highly nationalistic and protectionist" and which would not help resolve the global crisis.

Democratic Alliance (DA) finance spokesman Kobus Marais said everyone was "shocked" that SAA had once again been rescued by the government from bad management and financial decisions.

DA MP Dion George said that SA "simply cannot afford ongoing bailouts to entities such as Eskom and SAA".

"We cannot afford to squander the taxpayer's hard earned money on departments that fail to deliver and on filling the gaping holes in public enterprise balance sheets. Underwriting Eskom's debt is a further noose around the neck of our economy. Taxpayers cannot be expected to carry this liability much further. SAA can be a strategic and competitive asset, provided it is viable. As an increasing liability unbundling and/or privatisation must become realistic options," George said.

Independent Democrats MP Lance Greyling said the government should avoid rewarding mismanaged enterprises such as SAA with expensive government bailouts. "How can you justify such a bail-out and in the same breath question the affordability of extending the child support grant to 18 year olds?" he asked.

MPs from all parties stressed the need for greater efficiency and effectiveness in government spending, emphasising that the money allocated in the budget should be used for what it was intended.

"The underperformance of most government departments and the apparent lack of real skills and accountability is still a major barrier to development opportunities for all," Marais said.