Finance Minister Tito Mboweni has told Parliament in his Medium-Term Budget Policy Statement that some State-owned Enterprises (SOEs), with outdated business models are a fiscal risk and should be closed.
Mboweni is on a mission to trim down government’s spending. He says the SOEs must fix their governance failures, unsustainable debt burdens and operational performance over the next 10 years Eskom, and the energy sector will be supported with R230 billion for structural reforms.
Mboweni says government must wean the state-owned enterprises off the national budget. He says they can’t continue to throw money at Eskom.
“Going forward, the new cash flow support will no longer be equity, but will be in the form of loans – and a loan needs to be repaid with interests. Management have made an irrevocable commitment to implement government’s decisions and there is enough progress. We will negotiate the appropriate size of debt relief. Eskom is a business and it should be run like a business,” says Mboweni.
Mboweni has also told Parliament that government is targeting spending reductions of R21 billion in the 2020/2021 financial year and R29 billion in 2021/2022 financial year.
Minister Mboweni says the Ramaphosa administration is focused on keeping costs under control while working towards growing the economy.
He says the spending reductions will take place mostly in the areas of goods, services and transfers. Mboweni says the public sector spends over R5 billion on cell phone allowances annually. He says this will be stopped.
“If we are serious about running our country as a first-world country, we have to close the fiscal leakages. I mean a corruption, where huge amounts of public resources are wasted, and I’m taking away the cellphones – because people are paid salaries, and they can afford to buy their own cellphones,” says Mboweni.
Read Mboweni’s speech below:
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