LETTER: Fiscal model capture raises questions

I value Peter Attard Montalto’s views and outlook (“How the Treasury is holding it all together”, March 4).

He has a laundry list. I have one too. I would be interested to know how his models:

• Classify state-owned enterprise (SOE) debt with state guarantees;
• Classify SOE debt with cross-default clauses (is this the reason SAA flies on?);
• Classify municipal debt — estimate the national equity on the balance sheet of the nation when depreciation is repeatedly not offset by maintenance and reinvestment (in real terms, in a hard currency).

Does he offset the gold & foreign exchange contingency reserve account (GFECRA) windfall with the increasing value (in rand) of foreign-denominated debt? Do his models capture the risk that future rand falls are incentivised as they could be seen as a GFECRA windfall? How does he model the impact of GFECRA releases in future, say after 2027 when this line item has been exhausted?

Does his model capture the extent to which Eskom is being displaced by private sector alternatives (such as rooftop solar)? What will Eskom’s generation look like in 2030, with no new coal builds on the horizon to replace the retiring plants?

What will SA mineral exports look like in future if current production is not being replaced by new finds and new investment to unlock them?

Do his models capture the ripple effects of National Health Insurance, which include the emigration of skilled staff and the increasing patient-doctor ratio? What will the effect of emigration be on tax receipts?

Greg Becker
Via BusinessLIVE

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