South Africa: Tito Mboweni and Pravin Gordhan Defend R10.5-Billion Bailout for SAA

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analysis

Despite protestations by the Finance Minister that the R10.5-billion allocation to SAA is not a 'bailout', it has the hallmarks of undeserved financial assistance. The cash for SAA - or the 'bailout' - will come from deteriorating taxpayer funds.

Finance Minister Tito Mboweni has defended his decision to throw SAA a R10.5-billion lifeline - a controversial move that will see budgets of crucial service delivery programmes cut to shift taxpayer funds to the bankrupt airline.

Mboweni has insisted that the R10.5-billion allocated to SAA in the Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 28 October is "not a bailout" because the funds will bankroll the airline's business rescue process.

"A bailout would have made a huge [cash] injection into SAA. This is not what the budget has done. This is an allocation for the business rescue process," Mboweni told a joint meeting of Parliament's standing committee on public accounts on Thursday, 29 October, a day after tabling the MTBPS.

Mboweni contends that unlike previous bailouts to SAA - amounting to roughly R57-billion since 1994 - the latest will set the airline on a path of recovery under a business rescue process. Previous government bailouts have directly funded SAA, helping it...

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