Star 2022-02-24

Siphelele Dludla siphelele.dludla@inl.co.za Finance Minister Enoch Godongwana has remained bullish about South Africa’s fiscal discipline as the country’s better-than-expected revenue collection will help cover social spending and reduce the Budget deficit. In his Budget speech yesterday, Godongwana said the National Treasury was on course to close key fiscal imbalances and restore the health of public finances in the medium-term. Godongwana, however, said the country’s debt burden, currently standing at R4.35 trillion, remained a matter of serious concern amid growing spending demands. Debt‐service costs consume an increasing share of gross domestic product (GDP) and revenue. On average, 20 cents of every rand collected in revenue every year will be needed to pay debt-service costs. “This huge sum is owed to lenders domestically and around the world,” Godongwana said. “It incurs…

Banele Ginindza banele.ginindza@inl.co.za DEVELOPMENTS in the Russia/Ukraine conflict were too strong yesterday to make an impression on the rand even as Finance Minister Enoch Godongwana delivered his maiden Budget Speech, largely hailed for its positive connotations towards fiscal consolidation. The rand, which had been trading in the red at R15.04 to the US dollar in midday trade, firmed up somewhat to R15 after the speech, and closed weaker again at R15.07 due to overtures of conflict in the Russia/Ukraine standoff, which has bogged down the markets. “The rand has been mired by the Russian/Ukraine conflict, and news today of worsening tensions and the potential for further escalation,” said Investec chief economist Annabel Bishop. Oil prices have been on an upwards trajectory with Brent crude oil prices up by more than…

Siyabonga Mkhwanazi siyabonga.mkhwanazi@inl.co.za TRANSNET is seeking private partners in the port and rail freight network by the end of the next financial year. The government has in the past few months stated its intentions to bring in private players in the rail network. The company has incurred a loss of R8.3 billion in the 2020/21 financial year. This was after a profit of R2.9bn in the previous financial year. The Covid-19 pandemic had played a part in the business and operations of Transnet during this period. But it was hoping to record better results next year after business operations resumed with improved sales. In the Estimates of National Expenditure, Transnet was looking for private sector players in port and rail. “The company will actively seek private sector participation in…

Siyabonga Mkhwanazi siyabonga.mkhwanazi@inl.co.za STATE arms manufacturer Denel continues to be mired in financial difficulty with National Treasury giving it R3 billion in bailouts in the current financial year. But Finance Minister Enoch Godongwana yesterday warned that state-owned entities (SOEs) would not be given a blanket approach on bailouts, saying each case would be treated on merit. He said if an entity was given a bailout, it would be accompanied by tough conditions that would have to be met. It would not be business as usual. SOEs would have strengthen their balance sheets in the tough economic environment. Godongwana said billions had been spent on SOEs on the past few years and they needed to show returns for it. He said the government would need to ensure that entities that were…

Siyabonga Mkhwanazi siyabonga.mkhwanazi@inl.co.za Finance Minister Enoch Godongwana injected another bailout of R21.9 billion into Eskom as it struggles to meet its financial obligations, but flagged it would need to sell some of its assets to reduce debt. The Eskom debt is R392bn and it’s also owed R40.9bn by municipalities. However, Godongwana would not say which assets Eskom would need to sell. “We expect Eskom to take further steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply,” said Godongwana. He said National Treasury was also working with the power utility to reduce its debt. “Government continues to support Eskom to remain financially sustainable during its transition. To date, Eskom has been provided with R136bn to pay off its debt with…

Siyabonga Mkhwanazi siyabonga.mkhwanazi@inl.co.za SASRIA is planning to increase its premium prices and look for new clients after the government gave it a shot in the arm of R22 billion to settle claims after the riots that broke out in KwaZulu-Natal and Gauteng destroyed thousands of businesses. Many businesses were affected by the damage and destruction during the riots in July last year in the two provinces with the loss of R50bn to gross domestic product. The National Treasury said the looting led to claims of R32bn, but Sasria was not able to meet all these claims. “To help settle claims and ensure that the insurer has sufficient capital to meet regulatory requirements, government has allocated R22bn to Sasria in the current financial year. “This includes R3.9bn through the Second Special…