Expenditure ceiling in danger, Nene tells MPs
A breach is likely from the recapitalisation of SOEs, while large public-sector wage hike adds danger
Finance Minister Nhlanhla Nene has cited the outcome of the public-sector wage negotiations and the financial positions of state-owned entities (SOEs) as risks to the expenditure ceiling. Breaches of the self-imposed expenditure ceiling are closely watched by credit ratings agencies as they are an indication of a lapse in fiscal discipline. The ceiling is an instrument used by the Treasury to keep expenditure under control and to contain any widening of the budget deficit. It is a declaration of the state’s intent regarding its future expenditure plans. The Treasury has emphasised that any settlement to the public-sector wage negotiations that increases salaries by more than consumer price inflation would make these expenditure limits difficult to stick to. However, the public sector trade unions are demanding more than this. Several major SOEs — such as power utility Eskom and national carrier South African Airways (SAA) — are mired in debt and face profitability and liquidity chal...
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