State guarantees of R466bn unlikely ‘to explode’
Treasury director-general Lungisa Fuzile warns burden of guarantees will slow drawdowns for state-owned enterprises
Government guarantees to state-owned enterprises will not "explode" anytime soon, but they are a concern to credit ratings agencies, says outgoing director-general of the Treasury Lungisa Fuzile. Government guarantees to state-owned enterprises and entities amounted to R466bn at the time the 2017-18 budget was tabled in Parliament in February. The cause for concern was that the state will have to make good on these guarantees in the event of a default by their beneficiaries. This would place additional pressure on an already constrained fiscus. Fuzile was answering a question by ANC MP Pinky Kekana after a presentation to the finance committee on the Treasury’s annual performance plan in what was probably his last appearance in Parliament before his departure. The largest guarantee was for Eskom to build the Medupe and Kusile power plants. Of the R350bn guaranteed, R210bn had been drawn down so far. Drawdowns had accelerated recently as the build programme had picked up steam. Becau...
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