South Africa: SAA Gets Special Treatment in Mboweni's Mini-Budget

analysis

SAA is the only state-owned entity to get 'new' money from the government in the Medium-Term Budget Policy Statement. Others, such as SA Express, Eskom and the Land Bank got zip. And Denel -- on the brink of collapse -- was also snubbed.

Finance Minister Tito Mboweni has caved in to pressure from his Cabinet colleagues to continue supporting state-owned enterprises (SOEs) - including those that are unproductive and guzzlers of taxpayer funds.

This is despite growing warnings from global development finance institutions such as the World Bank and International Monetary Fund for the government cut off support for SOEs at a time when public finances are deteriorating due to the Covid-19 pandemic.

SAA is the only SOE that was allocated new money on Wednesday in the Medium-Term Budget Policy Statement (MTBPS), which outlines the government's expenditure framework and fiscal policy over the next three years.

Mboweni awarded SAA R17 billion in financial support for its aviation operations, in the form of an equity injection (actual money transfer) and a government guarantee. A guarantee is an agreement that the government will pay an SOE's outstanding debt to lenders if it defaults on loan payments. SOEs can use government guarantees to...

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