Finance Minister Tito Mboweni has confirmed that South African Airlines (SAA) will once again receive a multi-billion rand bailout – despite operating on its last legs. The announcement was made during the mid-term Budget Speech on Wednesday.
Finance Minister, Tito Mboweni has announced that SAA will receives a 10.5 million rand bailout to implement its business rescue plan and settle outstanding debt. #MTBPS2020
— Mbalenhle Mthethwa (@MbalikaMthethwa) October 28, 2020
How will the SAA bailout be funded?
- In total, R10.5 billion will be paid to the airline.
- This is separate from the R16.4 billion it received in February’s budget announcement.
- ‘Reductions to the baselines of national departments’ have been a big contributor in raising the funds for SAA.
- Cost-cutting measures at other public entities and their departments have helped raise additional cash.
- Further ‘conditional grants’ are also propping up the SAA bailout.
Why is SAA getting R10.5 billion?
Addressing Parliament on Wednesday, Tito Mboweni justified the monster cash-injection by saying that the government ‘could not run from its obligations’. He maintains that the decision is in line with existing fiscal commitments.
“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. This allocation is in addition to the R16.4 billion allocated over the 2020 MTEF in the February Budget for settling guaranteed debt and interest.”
“Our approach is in line with the principle that funding to state-owned companies must come from within the current framework and reprioritised from elsewhere. We cannot break the fiscal framework.”
Tito Mboweni
“This bailout is treason” – DA
The opposition in the National Assembly, however, has already registered its disapproval of this commitment. Shadow minister Leon Schreiber branded the bailout as ‘treasonous’, and DA MP Ghaleb Cachalia was also left spitting feathers:
“R10.5 billion is allocated to SAA,” says Mboweni. This is fiscal treason against taxpayers and the millions of suffering citizens of South Africa.
— Leon Schreiber (@Leon_Schreib) October 28, 2020
R10,5 billion earmarked for SAA to “implement Business Rescue”. This is to be funded from “the current framework and reprioritized”. @tito_mboweni please tell us where from and how much you’re taking from Peter to pay Paul to fly this faulty kite in a storm. #madness
— ghaleb cachalia. MP (@GhalebCachalia) October 28, 2020
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