Opposition parties dismayed by SAA’s costly bailout from govt

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The DA says Finance Minister Tito Mboweni has abandoned his commitment to stop costly cash lifelines.

South African Airways planes. Picture: Facebook.com

CAPE TOWN – Funding for state-owned entities has caused consternation among opposition parties.

On Wednesday, it was announced that South African Airways (SAA) was to get a generous bailout from government.

The Democratic Alliance (DA) on Wednesday in response said Finance Minister Tito Mboweni had abandoned his commitment to stop costly cash lifelines.

The party said South Africans would continue to pay for a “zombie state company” and would continue to suffer the consequences of ever-higher government debt.

Finance Director General Dondo Mogajane told a briefing, ideally state owned-entities that were not performing optimally should be closed down.

His comments come as Treasury is to give SAA a R10,5 billion bailout to help its business rescue process.

“Public entities that are not sustainable, state-owned companies that are not performing – that are not core – we have to close them down or sell them. We should only be supporting those that can boost the economy. There are many things we know we have to do.”

Mboweni, however, said funding for SOEs like Eskom remained to be seen.

Treasury officials also stated the power company should be sorting out its own finances and shouldn’t wait for a state bailout.

“There’s a lot to do to restructure the Eskom debt. There are a number of options that are being looked at so when we are ready to come with to answer to that, that can be done, when the process of divisionalisation of Eskom and that divisionalisation also results in the apportionment of the debt structure of Eskom.”

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