Whether Eskom’s debt is on the sovereign’s balance sheet or not should make zero difference to SA’s creditworthiness because it is merely an accounting trick (“Economists Try to Gauge Moody’s mood”, March 26).
Anyone considering Eskom’s mountain of debt to be something different from public debt is simply foolish. Eskom is never going to pay it back from its own resources, and that is simply a fact. In fact, given the government’s reluctance to grab the bull by the horns, with continued double-digit wage increases for its hugely bloated and very well-paid workforce, while not actually hiring the skills necessary to run the system due to a hiring moratorium, Eskom will certainly be drawing on tens of billions in additional public borrowing in the next few years simply to stay afloat (if you can call it that).
Then there is SAA, the SABC and others with similar situations of ever-increasing financial losses combined with political paralysis. And on the real economic side we have growth-reducing populist policies and general policy incoherence on issues such as land, all resulting in a poor investment outlook.