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Government guarantees on tap? Not without Parliament's say - new bill

Nov 02 2018 07:25
Khulekani Magubane, Fin24

Member of Parliament for the Democratic Alliance Alf Lees has tabled a private member’s bill to stop state-owned enterprises from racking up undisclosed and uncontested government guarantees on the taxpayer's tab.

Speaking to Fin24 on Thursday afternoon, after the Public Finance Management Amendment Bill was tabled, Lees likened the management of guarantees among state-owned entities to a young graduate accessing finance to buy a new car with their indulgent parent standing in as surety.

According to the Medium Term Budget Policy Statement, government guarantees to the value of R670bn have been issued, with R334.2bn of those guarantees utilised by the recipients.

However, if the bill is adopted and enacted, it will allow Parliament – the metaphorical parent – access to information on every government guarantee awarded and declined within 30 days of the responsible finance minister’s decision.

Several state-owned entities have made use of government guarantees in recent years. South African Airways got R4.8bn last year, while Denel got a R3.4bn guarantee in September.

Parliament 'shut out'

Lees told Fin24 the bill stipulated that the minister of finance must notify Parliament within 30 days of making a determination about each request for a guarantee from any state-owned entity or minister responsible for said entity.

"The way things currently are, the process shuts out Parliament scrutiny. Currently, we send questions to ministers in writing and they could respond much later, or we ask them questions in the assembly and then we discover these guarantees months after the fact," Lees said.

Lees said he did not anticipate the bill meeting any opposition in the legislative process, as it was introduced to promote transparency in the way that state-owned entities spend money.

"With this bill, we don’t ask for intervention but for transparency. It should be an easy bill to run through Parliament and we see no reason why anyone would oppose this bill," said Lees.

The bill extends Parliament’s oversight capacity when it comes to granting or refusing government guaranties, indemnities and securities in terms of the Public Finance Management Act.

Clause 1 of the amendment bill says the minister of finance must table a report in the National Assembly on his decision regarding each request from a member of Cabinet to issue a guarantee, indemnity or security.

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