Mboweni gives SAA R10.5bn to implement business rescue plan

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Finance Minister Tito Mboweni made the announcement while delivering his Medium-Term Budget Policy Statement in Parliament.

FILE: SAA planes. Picture: EWN

JOHANNESBURG – South African Airways (SAA) has been given the funds needed to restructure the airline as part of the government’s efforts to help state-owned entities.

Finance Minister Tito Mboweni made the announcement while delivering his Medium-Term Budget Policy Statement in Parliament.

“R10.5 billion is allocated to SAA to implement its business rescue plan. This allocation is funded through reductions to the baselines of national departments, public entities and conditional grants.”

• READ: Tito Mboweni’s Medium-Term Budget Policy Statement

The business rescue practitioners need the funds to settle retrenchment packages and launch a new airline.

The minister said that despite expenditure, the budget deficit had stabilised.

“Altogether, the in-year revised main budget deficit is now expected to be R707.8 billion, a little better than the Special Adjustments Budget. As ratio of GDP stays almost the same.”

The minister said that government had borrowed money but at low interest rates.

“We are also borrowing at favourable rates from international financial institutions. Yes, from the IMF, yes from the African Development Bank, yes from the Brics bank, so there’s no underground borrowing here.”

Reacting to the announcement, Western Cape Finance MEC David Maynier said that government’s SAA bailout was “unjustifiable and simply wrong”.

Maynier claimed that the bailout would compromise healthcare services and the well-being and dignity of the province’s residents.

“By defunding critical projects that provide food security, that provide ownership of property and land transformation and create jobs in the Western Cape and we will not go down without a fight, we will continue to do everything possible to oppose budget cuts that risk compromising front line service delivery in the Western Cape.”

Additional reporting by Kevin Brandt.

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