Godongwana must address Eskom’s R400 Million debt crisis: Energy expert

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Energy expert Chris Yelland says Finance Minister Enoch Godongwana must address government’s plans on a way forward around Eskom’s R400 Million debt crisis.

Godongwana will deliver his Mid-Term Budget Policy Statement on Wednesday. This comes as rolling blackouts continue impacting livelihoods and business.

Public outcry is growing for alternative, reliable and affordable energy sources.

Yelland says he expects him to transfer at least half of the power utility’s debt to the sovereign balance sheet.

He says plans should be made to take Eskom forward.

“As announced by the President when he detailed his emergency plan to end load shedding, we could expect from the Finance Minister a clarification regarding Eskom’s debt. There is some kind of expectation that perhaps government would announce that it would be taking over about half of Eskom’s current debt. About R200 million, taking it off Eskom’s balance sheet into the sovereign balance sheet,” says Yelland.

Fiscal framework 

The Institute for Economic Justice (IEJ) has urged Godongwana to shift the fiscal framework to tackle unemployment, poverty and inequality.

Economists expect revenue growth to be higher than February’s budget estimates on improved tax revenue.

The IEJ says budget cuts have a negative impact on the provision of public services and on long-term economic growth.

The Institute’s Zimbali Mncube says, “Key important things in terms of the grants is that grants are not hollowed by inflation. We’ve seen that there’s been a significant rise in food prices, electricity and other basic necessities, so we need to ensure that these grants are allocated enough funds so that they increase with inflation. We eagerly await for the Minister to tell us how they will protect public service, especially health and education.”

Tax rebait

Tax expert at Deloitte, Musa Manyathi says government is unlikely to give any tax rebait to workers after overruns in tax collections for the current financial year.

Economists expect revenue growth to be higher than February’s budget estimates due to improved tax revenue currently at R100 billion.

The biggest contribution is from corporate income tax, where mining taxes were better than expected due to strong commodity prices.

Manyathi says, “With the cost of living rising, with interest rates going up and fuel going up, then one would really like to see some kind of rebait, but I think to be realistic that’s very unlikely. If anything should happen, I think it’s just looking around at how you then continue assisting the poor and those that are marginalised and this is talking directly to the SDR, are you going to keep that permanently.”

VIDEO: Interview with experts ahead of Mid-Term Budget:

Additional reporting Amina Accram.