Finance Minister Tito Mboweni has questioned the sustainability of State Owned Enterprises (SOEs) like Eskom, saying they pose very serious risks to the fiscal framework.
Delivering his Budget Speech for 2019 on Wednesday, Mboweni said funding requests from SAA, SABC, Denel, Eskom and other financially challenged state-owned enterprises have increased, with several requesting state support just to continue operating
Isn’t it about time the country asks the question: do we still need these enterprises? If we do, can we manage them better? If we don’t need them, what should we do?— Tito Mboweni, Finance Minister
Mboweni said pouring money directly into Eskom in its current form is not sustainable and the national government will not be taking on its debt, which the power utility must ultimately repay itself.
Mboweni said a conditional R23 billion a year has been set aside financially to support Eskom during its reconfiguration.
The fiscal support is conditional on an independent Chief Reorganisation Officer (CRO) being jointly appointed by the Ministers of Finance and Public Enterprises, with the explicit mandate of delivering on the recommendations of the Presidential Task Team. We will make announcements in this regard in the coming weeks.— Tito Mboweni, Finance Minister
On other state-owned enterprises, Mboweni said treasury is reviewing the framework for state-owned enterprise support.
Government has revised the contingency reserve upwards to R13 billion for 2019/20 to respond to possible requests for financial support. Financial support will be budget neutral as far as possible.— Tito Mboweni, Finance Minister
The Finance Minister said the public wage bill is unsustainable. In view of this, older public servants will be able to retire early.
This will save an estimated R4.8bn in 2019/20, R7.5bn in 2020/21 and R8bn in 2021/22. In time this will be complemented by limits on overtime and bonus payments as well as pay progression.— Tito Mboweni, Finance Minister
And as a gesture of goodwill, members of Parliament and provincial legislatures and executives at public entities will not be receiving a salary increase this financial year.
On combating crime and corruption, Mboweni said National Treasury and the Department of Justice will work swiftly to support the establishment of the new Investigating Directorate in the NPA.
Excise duties on alcohol and tobacco will be increased, as follows:
- The excise duty on a can of beer goes up by 12 cents to R1.74
- A 750ml bottle of wine will have an excise duty of R3.15, which is up 22 cents
- The duty on a 750ml bottle of sparkling wine goes up by 84 cents to R10.16
- The duty on a bottle of whiskey will go up by R4.54 to R65.84
- A pack of 20 cigarettes goes up by R1.14 cents to R16.66
- The excise duty on a typical cigar will go up by about 64 cents to R7.80
- There will be no change to the excise duty on sorghum beer
Fuel levies will go up by 29 cents a litre for petrol and 30 cents a litre for diesel.
#RSABudget2019 Mboweni: Fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel.— 702 (@Radio702) February 20, 2019
See the list below for a summary of expenditures
Click on the link below to hear the full 2019 Budget Speech...
This article first appeared on 702 : #Budget2019 "Do we really need SOEs?"