Gordhan warns unprofitable parastatals

2013-02-27 18:05 - Sapa
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SAA plane ~ Supplied

Cape Town - Finance Minister Pravin Gordhan raised the spectre on Wednesday of restructuring loss-making parastatals, but ruled out privatisation.

In his budget review, Gordhan noted that a host of state-owned entities, from the national airline to Armscor and Alexkor, continued to lose money.

"Over the next year, government will work with SAA, SAX, Denel, the SA Broadcasting Corporation and the SA Post Office to develop sustainable long-term strategies, which may include some form of restructuring."

Gordhan was emphatic that this would not mean selling off state assets to the private sector, but rather a re-prioritising of state spending.

"It [privatisation] is not the issue...," he told a media briefing before delivering the 2013 budget.

"The bigger issue is if revenue continues to fall... We've got to look for other sources of income. The ready source of income is to cut expenditure, but this government will not continue to cut expenditure to the point where we impose austerity on our people."

Gordhan indicated that parastatals, many of whom had received lifelines in the recent past, would have a harder time securing funding from the Treasury.

"If we have been giving grants to a particular entity, we might decide they are no longer grants, they are loans, or we might decide from loans we might just go to guarantees, or we might decide that [if] x entity used to get on a very regular basis a certain amount of money, we might want to redirect that money."

"We will look at where are there assets that are owned by the state that could be better deployed in the cause of development in this country, rather than sitting in some space."

The estimates of national expenditure states that there will be "no transfer payments" to a host of state-owned entities over the medium term framework period. These include SA Airways (SAA), SA Express (SAX), Alexkor, Broadband Infraco, Denel, Eskom and Transnet.

In October, Gordhan gave SAA a R5bn guarantee as the company reported a R1.25bn annual loss, bringing its cumulative losses for the past eight years to R8bn.

The government backing was given on condition SAA presents a plan to return to profit by the end of March.

* Visit our 2013 Budget section for full coverage of Finance Minister Pravin Gordhan's National Budget speech.

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