STATE-OWNED ENTERPRISES
How business rescue for SAA could hurt country’s image
South Africans have recently become more vocal about the risks state-owned enterprises’ (SOEs) debts pose to the economy. Some economic observers argue that "the horse has already bolted" because the government wasted opportunities to rein in SOE borrowing over the past five years, despite warnings from organisations including the World Bank, the Organisation for Economic Co-operation and Development, and the IMF. Over the past three years these organisations have noted that the main risks to SA’s debt sustainability arise from rising contingent liabilities in SOEs. Similar sentiments have been expressed by all the major credit rating agencies. The government is already facing exposure of more than R900bn, mainly because of state guarantees to SOEs, so these companies will require firm management as they pose a huge risk to public finances. In September 2017, the national temperature was raised by what many considered as unnecessary South African Airways (SAA) bailouts by the Treasu...
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