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    Home » News » Post Office, SAA to get multibillion-rand bailouts

    Post Office, SAA to get multibillion-rand bailouts

    By Agency Staff24 October 2018
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    Finance minister Tito Mboweni

    National treasury has allocated R5-billion to help South African Airways to repay debt, but said the state-owned airline will have to engage with creditors to restructure almost double that amount.

    SAA has R14.2-billion of repayments due by March, treasury said in its mid-term budget statement on Wednesday. The company “is not generating sufficient cash to repay its total debt, and will have to negotiate with lenders to refinance or extend maturity dates,’’ it said.

    The carrier is one of “several” state-owned companies that will struggle to refinance or redeem debt without government assistance at a time when access to credit is becoming more difficult due to weak balance sheets, poor governance and liquidity challenges, treasury said. Contingent liabilities due to government guarantees for debt of state companies is a major risk to the fiscal path, it said.

    State-owned firms have a combined debt load of R1.6-trillion, of which R670-billion is guaranteed by the government, according to the budget review. Debt redemptions by the 10 biggest borrowers will average R66-billion annually in the next two fiscal years, more than government repayments due over the same period.

    Assistance to other state institutions announced in the budget review includes:

    • A R5.8-billion rand allocation to the South African National Roads Authority to help repay debt due over the next three years;
    • R2.9-billion rand to the South African Post Office; and
    • R1.2-billion to South African Express Airways.

    These allocations will be paid from a contingency reserve and unspent funds from other government departments, treasury said.  — Reported by Robert Brand, (c) 2018 Bloomberg LP



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