SAA’s R10.5 billion bailout irks political parties

The Democratic Alliance (DA) has reacted with dismay to the Medium Term Budget Policy Statement tabled by Finance Minister Tito Mboweni saying it lacked the initiative to move the country forward to the detriment of ordinary South Africans.

Amongst the measures announced by the Minister was that South African Airways (SAA) would be granted a further R10.5 billion bailout and that government aims to stabilise the ratio of debt-to-Gross Domestic Product at around 95% within the next five years.

DA Shadow Minister of Finance Geordin Hill-Lewis explains what he says are the repercussions of these announcements.

“The bailout of SAA is a critical failure the minister has made. This is a matter of principle. He has been warning the country and promising that there would be no further bailouts and he has retreated on that. He has abandoned that commitment and there will be another R10.5 billion on top of the R16.5 billion they got in February. The second retreat that the minister made today; we won’t stabilise debt by 2023, actually, it will only be by 2025/6 and it will be another trillion rands with a T in debt. We are going to be cutting into things like police, healthcare, higher education. All of those things are being cut in today’s budget.”

The United Democratic Party is also not pleased with the SAA bailout.

“Well, the government priorities are upside down, if you look at it. You have a government that calls on civil servants, public representatives to make sacrifices, to take a pay cut in the next few years, which is fine and we are prepared to enter that discussion. But the very same government, decides to give more than R10 billion to SAA as a bailout package. It is a lot like a provider of a family who decides to buy a Christmas tree when the family does not have bread and butter on the table,” says UDM MP, Nqabayomzi Kwankwa.

Minister Tito Mboweni delivers the Medium-Term Budget:

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Eskom and Icasa

Eskom and Icasa will also be funded mainly through reprioritisation by reducing the baseline of national departments and their entities as well as provincial and municipal conditional grants.

Mboweni says R23 billion will be allocated to Eskom while the Independent Communications Authority of South Africa (Icasa) receives R84.7 million for the licensing of the high demand spectrum.

Other provisions include R6.8 billion for the Department of Social Development to fund the extension of the special COVID-19 social relief of distress grants for three months.

An amount of R12.6 billion is allocated for the presidential employment intervention to address youth unemployment. An additional R1 billion is allocated for food relief to vulnerable households.

Debt

Mboweni says the country’s economy is now expected to contract by 7.8% this year. This is somewhat worse than the 7.2% predicted in June. He says South Africa’s debt-to-GDP ratio is expected to stabilise at around 95% within the next five years.

The government further expects the stock of debt to rise from roughly R4 trillion this year to five point five trillion in 2023/24.

“We propose consolidated spending of R6.2 trillion over the 2021 Medium-Term Expenditure Framework, of which R1.2 trillion goes to learning and culture, R978 billion to social development and R724 billion to health.”

African Christian Democratic Party (ACDP) Member of Parliament Steve Swart says the party is concerned about the country’s debt level.

“As the ACDP, we are deeply concerned about the lack of stewardship when it comes to dealing with government resources. The spiraling government debt level up to R5.5 trillion is totally unacceptable. And we see the public outrage that has been expressed, high levels of fraud and corruption particularly now with the COVID-19 and of course, state capture and corruption. We have to start collecting the stolen funds and ensuring that those that are guilty of corruption are locked away.”

Political parties’ reaction to MTBPS:

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-By Tshepo Mongoai and Naledi Ngcobo