New allocations to water infrastructure provider the Trans-Caledon Tunnel Authority (TCTA) and SAA have increased the government’s debt guarantees to state-owned entities (SOEs) by R13bn over the next three years. This takes to R483bn its exposure to guarantees on the outstanding debt of 12 SOEs in the financial year. What this means is that the government has to stump up R483bn, should any of the major SOEs default on their debts. A cross-default clause on the major utilities means that failure to meet a debt payment when it becomes due by a single institution automatically triggers a settlement of all debt owed by the other SOEs. However, even though companies such as SAA and Denel have on numerous occasions failed to meet payment obligations when they are due, the government has so far succeeded in keeping capital providers from demanding immediate settlement. To curtail demands for new funding, finance minister Tito Mboweni diverted about R6bn from other budget items. The Land B...

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