Page 11 - AfrElec Week 43 2022

AfrElec ESKOM AfrElec

SA finance minister

expected to tackle

Eskom’s debt in budget

SOUTH AFRICA SOUTH Africa’s Finance Minister Enoch civil society groups have lobbied for the intro-
Godongwana is expected to announce a plan duction of a universal basic income grant.
to take on part of the struggling power utility According to Institute for Economic Justice,
Eskom’s debt in a mid-term budget on Wednes- a Johannesburg-based think tank, a grant of
day (October 26), Reuters reports. ZAR350 a month introduced during the Covid-
Economists have been putting pressure on 19 pandemic should be increased to the food
Godongwana to tackle massive Eskom’s debt. poverty line of more than ZAR660 a month.
However, they believe the legally complex trans- This could cost the state an additional ZAR30bn
fer will take time to execute. a year, says Reuters.
The state-owned enterprise (SOE) has been A recent Reuters poll predicted that buoyant
stuck in a financial crisis for years and has mining receipts would allow Godongwana to
roughly ZAR400bn ($21.69bn) in debt it cannot give a narrower budget deficit forecast for this
afford to service, Reuters writes. Eskom’s recur- fiscal year. Some economists believe a temporary
ring government bailouts have placed public extension of the ZAR350 Social Relief of Distress
finances under huge strain, while officials grap- grant could be funded by higher revenues from
pled with different ways to solve the problem. mining taxes.
Analysts say a large portion of Eskom’s debt However, analysts expect the government to
needs to be absorbed by the state to make the stick to a conservative fiscal policy under tight-
SOE financially stable. ening global financing conditions, as economic
According to Isaah Mhlanga, chief economist growth is anticipated to remain weak in the com-
at Alexforbes, anything less than ZAR150bn ing years.
would be deemed insufficient. Meanwhile, BNP “We expect the fiscal consolidation strategy
Paribas analysts said getting bondholder buy-in to be sustained, providing fiscal certainty and
for the debt transfer would be critical. sustainability,” local bank FNB said in a research
Economists also expect Godongwana to note, as quoted by Reuters.™
unveil new support measures for the poor, as

Week 43 26•October•2022 www. NEWSBASE .com P11