EDITORIAL: Enabling the bail-out addict
There will undoubtedly be more calls for cash from SAA, which now can’t borrow from banks or the market
So much for "deficit neutral" financing of ailing state-owned enterprises (SOEs)! The government has promised for some years now that if financially strapped SOEs were desperate for cash, the Treasury would provide this in a way that would not bump up the fiscal deficit. That’s why the government sold its Vodacom shares to bail out Eskom a couple of years ago — and why it had been hoping to sell Telkom shares to finance the continuing financial catastrophe that is South African Airways (SAA). Now we are told the government has, yet again, raided the public purse to prevent SAA from defaulting on its loans. Two months ago, it had to cough up R2.3bn to repay a maturing loan that Standard Chartered refused to roll over. This time, the finance minister has stepped in to repay a R1.8bn loan that Citibank would not roll over and he has supplied an additional R1.2bn of cash to top up SAA’s working capital, presumably to help the bankrupt airline pay salaries and suppliers. The money comes ...
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