National Treasury has confirmed additional financial support for the embattled South African Airways.
Presenting the medium-term budget policy statement (MTBPS) on Wednesday (28 October), finance minister Tito Mboweni said that Treasury would allocate R10.5 billion to SAA to implement its business rescue plan.
This allocation was mainly funded through reductions to the baselines of national departments and their public entities, and provincial and local government conditional grants, Treasury said.
This follows the R6.5 billion provisionally allocated to SAA for the settling of its guaranteed debt and interest.
SAA suspended all operations in September as it waited for the government to provide it with what the funding it said it required to enact its turnaround plan.
Mboweni has previously made it clear that he did not support the further bailout of SAA, as there are limited government funds and he believed they were best used elsewhere.
National Treasury was also reportedly reluctant to comply with government’s order to find funds to bail out SAA, as it was worried that this could cause significant issues to the nation’s fiscal credibility.
However, public enterprises minister Pravin Gordhan and the ANC were insistent that SAA needs to keep flying, and this must come from state funding.
Treasury said that SAA and other state-owned enterprises were seen as short to medium‐term risks to the country’s fiscal framework.
“Several companies, including South African Airways, are insolvent and have insufficient funds to cover operational expenses,” it said.
Other risks include uncertainty around the speed of the economic recovery and questions around expenditure reductions – particularly on the wage bill.
Mboweni said that R3 billion was allocated to the Land Bank in June and the bank will require an additional R7 billion over the medium-term to support its restructuring. He added that R23 billion has been allocated to Eskom.