Could SAA’s bailout be R4.6bn?

Johannesburg - National Treasury’s bailout of SAA could actually have amounted to R4.6bn, rather than R2.3bn, if the government guarantee had not been reduced by R2.3bn.

This is because Finance Minister Malusi Gigaba made no announcement about repealing or limiting the guarantee so that SAA would not be able to borrow a further R2.3bn from another institution.

Charl Kocks of Ratings Afrika says Treasury and SAA have kept the wording of the guarantees under wraps.

“If the guarantees that government has granted with the cash settlement of the debt at Standard Chartered to date remain valid, SAA could again borrow against the guarantee,” said Kocks.

SAA has R19.1 billion in guarantees from the National Treasury.

This means that the beleaguered airline used R2.3bn to pay off a debt with Standard Chartered Bank, and in doing so, freed up R2.3bn in government guarantees to borrow again.

Hence, the bailout to SAA would be R4.6bn.

Treasury did not respond to enquiries sent to them by City Press’ sister newspaper, Rapport.

This week, Gigaba maintained that the bailout was “fiscally neutral” - a reference to the fact that government did not immediately have to borrow money or tinker with taxes to make the payment.

However, warns Leon Claassen, an analyst at Ratings Afrika, the step is neutral only for as long as SAA’s guarantee is accordingly reduced and it cannot borrow further to pay for current expenses.

Although Treasury did not mention the amount of the bailout in its initial statement, it was revealed in Parliament that this would total about R2.3bn.