Budget Speech 2020: More goverment bailouts for struggling SOEs

Budget Speech 2020: More goverment bailouts for struggling SOEs

- Finance Minister Tito Mboweni has announced a number of bailouts for struggling SOEs

- Taxpayers will evidently continue to carry the burden of dysfunctional entities

- This comes as Mboweni tabled his Budget Speech for this financial year

PAY ATTENTION: Click “See First” under the “Following” tab to see Briefly.co.za News on your News Feed!

Finance Minister Tito Mboweni has announced bailouts for struggling state-owned entities.

The minister revealed that a further R16 billion bailout would be made available to the bankrupt South African Airways.

This bailout will be paid over the course of the next three years in order to help meet the airline's financial obligations, including servicing debts:

“Government has set aside R16.4bn for SAA over the medium term to repay the airline's guaranteed debt and to cover debt-service costs. The costs of these adjustments are still being finalised, and will be financed from existing provisional allocations for state owned companies."

READ ALSO: Budget Speech 2020: Mboweni announces no change in VAT, tax relief

Running at a loss of over R32 billion for more than a decade, the embattled airline was recently placed under business rescue.

Mboweni announced that the government is considering its current ownership of SA Express, which has accumulated R1.2 billion in losses over the last ten years:

“Government will need to assess its appetite for continued ownership for the carrier, given that it has a limited role in the local aviation market."

Eskom will also be allocated another R43.6 billion in bailouts in order to help service outstanding debts. This comes in addition to the R49 billion injection received last year:

“This is partly a result of non-payment by municipalities and other consumers. The government is working with municipalities to strengthen governance and financial management."

The SABC is another state-owned entity that will need the state's help to stay afloat, with Mboweni announcing another R1.1 billion by the end of next month.

R3.2 billion worth of rescue packages were allocated to the public broadcaster last year.

State-owned arms maker Denel will be receiving a R576 million allocation, with Mboweni commenting:

“This support is allocated with conditions that emphasise the need for Denel to speedily implement its turnaround plan. The plan includes exploring private-sector participation, optimising its property and plant, and developing an appropriate funding model. It's critical for government to define Denel's role in a modern defence industry.”

Enjoyed reading our story? Download BRIEFLY's news app on Google Play now and stay up-to-date with major South African news!

Source: Briefly.co.za

Online view pixel