{"id":344860,"date":"2019-10-07T09:43:51","date_gmt":"2019-10-07T07:43:51","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=344860"},"modified":"2019-10-07T09:43:51","modified_gmt":"2019-10-07T07:43:51","slug":"south-africa-is-running-out-of-time","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/344860\/south-africa-is-running-out-of-time\/","title":{"rendered":"South Africa is running out of time"},"content":{"rendered":"

South Africa\u2019s government has spent months mostly talking about how to save the debt-stricken state power utility Eskom Holdings SOC Ltd, spur economic growth and get its shaky finances back on track. Financial realities may force an end to the dithering.<\/p>\n

The government will have to make some decisions by Oct. 30, when Finance Minister Tito Mboweni is due to deliver his mid-term budget policy statement and set out how massive bailouts for Eskom will be funded at a time when growth and tax revenue are falling short of target.<\/p>\n

That\u2019s two days before Moody\u2019s Investors Service is scheduled to make a call on the nation\u2019s only remaining investment-grade credit rating.<\/p>\n

\u201cWe are really running out of time,\u201d Isaac Matshego, an economist at Nedbank Ltd, said by phone. \u201cThe number one priority for the government right now should be to stabilize the key state-owned enterprises, not only because they are failing operationally but also because they are a heavy burden on the fiscus.\u201d<\/p>\n

President Cyril Ramaphosa\u2019s ability to push through unpopular policies is constrained by his tenuous hold on the deeply divided ruling African National Congress and opposition from its labor union and communist allies, who oppose privatization, fearing job losses.<\/p>\n

The slow pace of reform has frustrated investors, driven business confidence to the lowest level since 1985 and weighed on the rand – it\u2019s slipped 23% against the dollar since Ramaphosa took office in February last year. The currency weakened 0.2% to R15.0766 to the greenback by 7:39 a.m. in Johannesburg on Monday.<\/p>\n

Progress has been particularly slow when it comes to fixing Eskom, which supplies about 95% of the nation\u2019s power and is seen as the biggest risk to the economy.<\/p>\n

The utility has been without a permanent chief executive officer since Phakamani Hadebe quit in July, isn\u2019t generating enough revenue to cover its costs and has been allocated R128 billion ($8.4 billion) in bailouts over three years to remain solvent.<\/p>\n

\"\"<\/a><\/p>\n

Lingering Promises<\/strong><\/p>\n

The government signaled its intent to act decisively in August, as the Treasury asked departments to prepare budget proposals to cut their spending by an average 6% over the next three fiscal years – saving as much as R300 billion. Eskom\u2019s turnaround strategy is now due to be unveiled by the end of this month, as is its new CEO and the energy blueprint.<\/p>\n

\u201cRamaphosa is now fully aware that he must be seen to be doing things and taking control and that the time for treading water is over,\u201d Susan Booysen, director of research at the Mapungubwe Institute for Strategic Reflection, said by phone.<\/p>\n

\u201cAll those comments that he was a lame duck president and he was unable to control the factions in the ANC must have hit home.\u201d<\/p>\n

Even so, differences persist within the government and ruling party over how best to revive the economy.<\/p>\n

While the Treasury suggested in August that Eskom could sell power plants to settle its R450 billion of debt and that other assets be privatized, these proposals failed to win public endorsement from the ANC. The party has traditionally sought to build consensus among its widely divergent constituents, which has all too often resulted in policy paralysis.<\/p>\n

\u201cThe next steps will require political capital expenditure and that\u2019s where things will get difficult,\u201d said Peter Attard Montalto, head of capital markets research at research firm Intellidex. \u201cEffecting major policy shifts will be both challenging and time-consuming.\u201d<\/p>\n

\n

Read:<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa\u2019s government has spent months mostly talking about how to save the debt-stricken state power utility Eskom Holdings SOC Ltd, spur economic growth and get its shaky finances back on track. Financial realities may force an end to the dithering.<\/p>\n","protected":false},"author":59,"featured_media":212905,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[1164,26,1799],"class_list":["post-344860","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-eskom","tag-headline","tag-nedbank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/344860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=344860"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/344860\/revisions"}],"predecessor-version":[{"id":344872,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/344860\/revisions\/344872"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/212905"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=344860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=344860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=344860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}