South Africa: Trying to Fix Eskom While Being Kept in the Dark

opinion

The idea of using the pension fund savings of state employees to bail out Eskom has been gaining traction, but beyond some airy proposals, it is remarkable how little detail is in the public domain about the option, the scenarios and the dynamics of such a dramatic step. It's time to put some flesh on the bones of this elephant.

Some months back as power utility Eskom began careering out of control, operationally and financially, threatening the economy and the fiscus as much of its debt is guaranteed by the government, I spoke to a former Treasury official on the likely way forward.

This was specifically if runaway debt could mean that the country ended up in the hands of the International Monetary Fund (IMF) which makes governments do some of the unpopular things they cannot do for themselves, such as control errant state enterprises, close or sell the loss-makers and generally take control of government spending.

His view was that long before we begin earnest conversations with the IMF, the R2-trillion of mostly pension funds of state workers managed by the Public Investment Corporation would be accessed.

It was not too many months later, in December 2019, that I...

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