Finance minister Tito Mboweni expressed impatience on Friday at how long it is taking SAA’s business rescue practitioners to conclude their work.
He also expressed anxiety over the decisions by the credit ratings agencies S&P Global and Moody’s Investors Services on SA’s sovereign credit rating, which he said have the potential to increase SA’s borrowing costs and make the fiscal framework tighter if there is a deterioration.
Both credit ratings agencies are scheduled to announce their decision on SA later in the day.
Mboweni was speaking during a debate in the National Assembly on the Division of Revenue Amendment Bill, which allocates funds to the three spheres of the government and was passed by 183 votes in favour against 105.
Opposition MPs from the DA, EFF, IFP, Freedom Front Plus, and African Christian Democratic Party (ACDP) all voted against the bill with one of the main grounds for their objections being the R10.5bn that was taken away from other departments, especially those at the forefront of service delivery, to fund SAA’s rescue plan.
Another concern raised was the reduction in allocations to local government.
Mboweni has made his personal opposition to further bailouts for SAA clear in the past and stressed in his concluding remarks to the debate that the R10.5bn allocation was a cabinet decision and was “not Tito Mboweni’s wishes”.
On the business rescue process. Mboweni said the business rescue practitioners — Siviwe Dongwane and Les Matuson — “owe it to all of us to complete their process and, indeed, ensure that their plan works because I fully, completely understand why there is some impatience on the part of many that [these] business rescue practitioners are just going on and on and on”.
“They must come to an end at some point. At the end of July this year we paid the debt of SAA of about R10bn and then at the end of August we paid R3.5bn of SAA debt. So yes, we can’t go on like this. At some point this thing has to be sorted out.”
In reply to a question in parliament in early June, public enterprises minister Pravin Gordhan revealed that the practitioners had been paid R36m since their appointment in December.
Implementation of the business rescue plan will, however, be held up until the bills allocating the funds become law, which is only expected in January 2021.
The main cause for the delay in finalising the plan is uncertainty over whether the government will fund it.
Local government budgets
Mboweni also sympathised with the concern about the ability of local government to function with the reduced budgetary allocations. This requires that the focus be on critical issues as some of the expenditure by local government is “totally unnecessary”, he said, for example, money spent on body guards.
Municipalities have to pay their debt to the water boards, which, at end September amounted to R12bn, otherwise they would be in trouble, Mboweni warned.
Mboweni outlined the backdrop to the bill, which is the global recession and the 7.8% economic decline projected for the domestic economy this year due to the Covid-19 pandemic and other factors.
He said poor revenue collection requires adjustments in the expenditure envelope to keep the sanctity of the fiscal framework in place — this is critical for the credit ratings agencies.
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