NEW TREASURY FRAMEWORK
How government guarantees to SOEs to come with a stick
The new framework is one of the confidence-creating measures announced by Finance Minister Malusi Gigaba
The Treasury is working on a new stringent framework for guarantees to state-owned enterprises (SOEs), which will impose strict conditions on them and possibly penalties for noncompliance. The new framework is one of the confidence-creating measures announced by Finance Minister Malusi Gigaba. The size of the government’s ballooning guarantee book, which now totals about R470bn, is one of the concerns of credit ratings agencies because of the risk it poses to the fiscus. Their concern has been heightened by the sharp deterioration in the finances of some of the SOEs, particularly of the cash-strapped Eskom, which has state guarantees amounting to R350bn. Treasury deputy director-general for asset and liability management Anthony Julies told members of Parliament’s finance committee on Wednesday, during its meeting with South African Airways (SAA) board members and executives, that the framework — which has to be finalised by March 2018 — would be presented to Cabinet for approval. J...
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