Star 2023-02-23

Budget provides for a R254 billion debt relief intervention in a bid to turn the tide on the utility’s financial position ESKOM will not be spending capital on any greenfield projects for the next three years as part of the conditions attached to the R254 billion debt relief intervention provided by the government in a bid to turn the tide on the utility’s financial position. Instead, the struggling power utility will focus on maintenance of the existing generation fleet to improve the availability of electricity, while additional new generation capacity will be derived from independent power producers and the southern African power pool. These are some of the conditions attached to the large-scale debt relief arrangement announced by Finance Minister Enoch Godongwana yesterday during his Budget Speech in Cape…

THE RAND strengthened slightly toward R18.14 against the dollar yesterday, after Finance Minister Enoch Godongwana delivered a market-friendly Budget on the back of deteriorating economic outlook. Godongwana’s Budget Speech reiterated the government’s commitment to debt stabilisation, and a primary surplus. He beat down on a well-trodden path of fiscal consolidation, forecast lower budget deficits in the medium term, despite the debt stabilising at higher levels and economic growth weakening amid the ongoing Eskom power crisis. In this regard, he said the government planned to take on more than half of Eskom’s debt over the next three years to help strengthen the power utility’s balance sheet and operations, and enable it to restructure. Eskom welcomed the financial relief afforded by the government but indicated that it would study the details of…

IN NOVEMBER 2021 the new Finance Minister Enoch Godongwana said he was “the new sheriff in town, and he would tackle the outlaws”. In February 2022, he proclaimed that the time had come to round up the posse to take down South Africa’s criminals. In February 2023 he reported slow but steady progress in rounding up the criminals, which is why since taking the helm of South Africa’s public finances he has empowered law enforcement by increasing their budget allocations. Riding at his side to combat the wild west of South Africa’s dodgy dealings, came his posse: Team Treasury, the South African Revenue Service (Sars), the National Prosecuting Authority, and also the big guns – the extended help from international agencies such as Interpol and tax authorities from around the…

THE 2023 BUDGET saw a weakening in the government’s debt to gross domestic product (GDP) projections and fiscal deficits, and with nearly three quarters of debt relief for Eskom on the R350 billion the State guarantees. The government’s gross debt is consequently now projected to stabilise at 73.6% of GDP in 2025/26. Previously the projection was estimated to peak at 71.1% in 2022/23 in October’s Medium-Term Budget Policy Statement. Key credit rating agencies (Fitch Ratings, Moody’s Investors Service and S&P Global) already rate South Africa’s debt, as including all Eskom and other State-owned enterprises (SOE) debt that the government holds guarantees over, and so the impact should be credit neutral. Some improvements in fiscal projections did occur, with the Budget deficit for 2022/23 lowered to -4.2% of GDP,…

FINANCE Minister Enoch Godo- ngwana has slashed South Africa’s economic growth forecast for 2023, citing the impact of the intense electricity supply shortages as the single biggest risk factor. Although South Africa’s economy is estimated to grow by 2.5% in 2022 from a previously forecast 1.9% on the back of the stronger-than-expected rebound in the third quarter, persistent power cuts have dimmed the outlook in the medium term. Eskom’s deteriorating electricity generation capacity is expected to worsen further this year after the power utility implemented record levels of load shedding in 2022, with 207 days of rotational power cuts compared with 75 days the year before. Delivering his 2023 Budget Speech inCape Town’s City Hall, Godo- ngwana said the lack of reliable electricity supply was the biggest economic constraint. Godongwana…

SOUTH Africa’s debt burden will cross the R5 trillion mark for the first time in history over the next three years, mainly due to the R254 billion partial take-over of Eskom debt, which will reflect on the national balance sheet henceforth. This was revealed by Finance Minister Enoch Godongwana as he warned of the risks to the fiscal outlook when he tabled his 2023 Budget Speech. These risks include a worsening of the economic outlook, a further weakening of the finances of State-owned companies, and an unaffordable public-service wage agreement. Godongwana said if these risks were to materialise, they would require the government to make difficult budgeting trade-offs. “For these reasons, we must continue exercising fiscal restraint,” he said. “Accordingly, government non-interest spending will be kept below the…