Gigaba: 9 SOEs have debt of close to R700bn

Cape Town – Nine of South Africa’s state-owned entities racked up debt of close to R700bn in the 2015-’16 financial year on which they had to pay R51bn worth of interest.

This was according to a written response from Finance Minister Malusi Gigaba following a parliamentary question posed by the Democratic Alliance’s (DA) Archibold Figlan.

In his response, Gigaba made a distinction between state-owned entities that borrow for capital expenditure, namely the Airports Company of SA (Acsa), SAA, Sanral, The Trans-Caledon Tunnel Authority (TCTA) and Transnet. The debt these six entities incurred amounted to R557.1bn with an interest rate of R43.9bn for the 2015/16 financial year.

This excludes the over R200bn guarantee that government has provided to Eskom. 

READ: Eskom's government guarantee tops R200bn

The other three state-owned entities, Gigaba said, are development finance institutions – the Land Bank, Development Bank of SA and the Industrial Development Corporation (IDC). Their debt for the 2015/16 financial year amounted to R112.8bn on which R7.1bn of interest was paid.

Gigaba in his reply did not mention the guarantee that was provided to Eskom to build the Medupe and Kusile power plants. Of the R350bn guaranteed, R210bn had been drawn down so far.

State-owned entities contribution to South Africa’s debt to GDP has been cause for concern among economists who have warned that it is not sustainable. It is also worrying to ratings agencies which have said on a number of occasions that state-owned entities are too dependent on government for funding.

READ: Agencies sound alarm over state guarantees 

Gigaba recently told journalists at a media briefing that ratings agencies are especially concerned about the fiscal risk these entities pose to government’s ability to toe the fiscal line. 

He was critical of the well-paid executives at state-owned entities who do not manage and govern properly and called on them to exercise the same fiscal prudence that the rest of government is doing.

"People who occupy executive positions at SOEs are highly paid, he added. “We can’t pay (such high) salaries for people who think they can run them (SOEs) down (with) impunity. We need to be punitive to those who do shoddy work.”

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