https://www.engineeringnews.co.za
Africa|Financial|Mining|Power|Service
Africa|Financial|Mining|Power|Service
africa|financial|mining|power|service

Eskom debt plan in focus at South Africa's mid-term budget

25th October 2022

By: Reuters

  

Font size: - +

South Africa's finance minister is expected to announce a plan to take on part of power utility Eskom's mammoth debt in a mid-term budget on Wednesday, although analysts say the legally complex transfer will take time to execute.

State-owned Eskom has been mired in financial crisis for years and has roughly R400-billion in debt it cannot afford to service.

It has required recurring government bailouts that have placed public finances under huge strain, with officials grappling with different ways to solve the problem.

Economists say a large portion of Eskom's debt needs to be absorbed by the state to make it financially stable.

"Anything less than 150 billion rand would be deemed insufficient," said Isaah Mhlanga, chief economist at Alexforbes.

BNP Paribas analysts said getting bondholder buy-in for the debt transfer would be critical.

Economists are also watching whether Finance Minister Enoch Godongwana unveils new support measures for the poor, as civil society groups have lobbied for the introduction of a universal basic income grant.

The Institute for Economic Justice, a Johannesburg-based think tank, says a grant of R350 a month introduced during the Covid-19 pandemic should be increased to the food poverty line of more than R660 a month, which could cost the state an additional R30-billion a year.

Some economists believe a temporary extension of the R350 Social Relief of Distress grant could be funded by higher-than-expected revenue from mining taxes.

But overall, analysts expect the government to stick to a conservative fiscal policy, as economic growth is expected to remain weak in the coming years and global financing conditions are seen tightening.

"We expect the fiscal consolidation strategy to be sustained, providing fiscal certainty and sustainability," local bank FNB said in a research note.

A Reuters poll predicted buoyant mining receipts would allow Godongwana to give a narrower budget deficit forecast for this fiscal year.

Edited by Reuters

Comments

Showroom

Werner South Africa Pumps & Equipment (PTY) LTD
Werner South Africa Pumps & Equipment (PTY) LTD

For over 30 years, Werner South Africa Pumps & Equipment (PTY) LTD has been designing, manufacturing, supplying and maintaining specialist...

VISIT SHOWROOM 
Environmental Assurance (Pty) Ltd.
Environmental Assurance (Pty) Ltd.

ENVASS is a customer and solutions-driven environmental consultancy with established divisions, serviced by highly qualified and experienced...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

On-The-Air (17/05/2024)
On-The-Air (17/05/2024)
17th May 2024 By: Martin Creamer
Magazine round up | 10 May 2024
Magazine round up | 17 May 2024
17th May 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.223 0.272s - 177pq - 2rq
Subscribe Now