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Treasury hails SONA as 'credit positive' as opposition MPs slam lack of specifics

Jun 21 2019 05:01
Khulekani Magubane, Fin24

National Treasury director general Dondo Mogajane has said that President Cyril Ramaphosa's State of the Nation address on Thursday evening in Cape Town as "direct, relevant and looks to be credit positive".

Opposition members of Parliament, meanwhile, criticised the speech for lacking specifics, appearing to retread policies that had already been announced, and announcing more money for struggling power utility Eskom.  

Mogajane told Fin24 that Ramaphosa's speech, to a joint sitting of both houses of Parliament, was forthright about the challenges facing the South African economy. His initiatives should be given a chance to make an impact, he said. 

In his address, Ramaphosa said Parliament will urgently table a special appropriations bill to allocate a 'significant portion' of the R230bn in fiscal support that Eskom needs. The president said the debt-laden power utility only has sufficient cash to meet its obligations until the end of October 2019. 

The president also reaffirmed the current mandate of the SA Reserve Bank, vowed to support a buy local campaign, and pledged to boost youth employment by two million by 2030. 

"The speech shows that we are going somewhere. The administration must be given an opportunity to chart a path for the economy and it then becomes out department’s work to support that path," said Mogajane.

The financial status of Eskom has been flagged as one of SA's key economic weaknesses by credit rating agencies.  

Of the three major international ratings agencies, only Moody's has kept SA at above investment grade.  If Moody's downgrades SA to sub-investment grade, the country will be ejected from the major Citi World Government Bond Index, forcing asset managers to sell billions of rands' worth of SA bonds. 

'What a failure' 

Congress of the People MP Willie Madisha told Fin24 that Ramaphosa's ambitious employment targets would not be realised, based on the speech. "What a failure. I thought he would give us a program to help us out of our situation, but he has repeated the problems we face that we already know, with no clear way out," he said. 

African Christian Democratic Party MP Steve Swart said another bailout to Eskom was a cause for concern.

"We need to restructure Eskom, but where will the money come from? We believe that the money Eskom lost through state capture must be recovered. It is also a question of whether the president will be allow the room to make this happen within the ANC," said Swart.

Democratic Alliance MP Kevin Mileham said the address was "disappointing to say the least".

"We still don’t have enough details on the unbundling of Eskom, but that is not our only problem. We still have an Integrated Resource Plan that is not approved and no Integrate Energy Plan," he said. 

Inkatha Freedom Party MP Narend Singh said that throwing money at state-owned entities would not solve their troubles. "A lot of this comes with high hopes, but where will the money come from? One has to conclude that there will be taxes and tariffs. What we would have hoped for are quick tangible wins," said Singh.

EFF leader Julius Malema, meanwhile, criticised Ramaphsoa for not announcing anything related to the land question. "He still doesn't know what he wants to do for South Africa", said Malema. 

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