South Africa: The Poor Will Pay for SAA

A South African Airways Airbus landing at Munich Airport (file photo).

Ministers will be asked to make further budget cuts to free up R10.4bn in funding for the SAA business rescue process. Without this funding, SAA will be liquidated, portending its demise.

When the Cabinet meets within the next two weeks, ministers will be asked to make more budget cuts in crucial service delivery programmes. This will be over and above the departmental budget cuts of at least 20% that were pencilled into the June supplementary budget.

Budgets that were slashed in June include, among others, building schools, support for maths and science initiatives in basic education, provincial road maintenance, allocation of human settlements to the poor, the land reform and rural development programme and allocations towards SA's gender-based violence crisis.

Further cuts in similar areas are expected, including in President Cyril Ramaphosa's state-funded initiatives to create jobs. Ministers won't be asked to cut budgets again because they suddenly believe in fiscal prudence during the Covid-19 pandemic. But they will be asked to reprioritise funds to save SAA, an unproductive state-owned airline.

SAA requires R10.4-billion to fund the implementation of its business rescue plan, which proposes paying unsecured creditors nearly R2-billion over three years, retrenchment packages worth R2.2-billion to 2,000 workers,...

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