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The mess at Eskom has blown the budget out of the water, forcing Tito Mboweni to be the first finance minister to breach the National Treasury’s sacrosanct expenditure ceiling — a move that will reignite ratings pressure and disappoint the markets. It is the first time since the ceiling’s inception in 2012 that SA has been unable to stay within its spending envelope. This is a troubling landmark that raises grave doubts over SA’s ability to return to fiscal sustainability in the absence of severe adjustments to spending or taxation. The bottom line is that economists’ worst fears about the fiscal risks posed by state-owned enterprises are coming to fruition — and the Treasury is battling to push back against their demands. Forced to provide a 10-year bailout of R150bn — or R23bn annually over the medium term — to the effectively bankrupt utility to keep SA’s lights on, the Treasury was damned if it did and damned if it didn’t. The alternative would have spelt disaster for the econom...

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