Giving Eskom loans will instil discipline: Gordhan

Wednesday, October 30, 2019

Public Enterprises Minister Pravin Gordhan says reverting to giving Eskom loans will instil discipline and ensure that the power utility lives within its means and manages its finances better.

He said this when reacting to Finance Minister Tito Mboweni’s Medium Term Budget Policy Statement outside the National Assembly on Wednesday.

In his speech, Mboweni said any cash injection aimed at supporting the cash flow for embattled power utility Eskom will be in a form of loans, and not equity.

To meet unanticipated cash needs, National Treasury brought forward R26 billion in 2019/20, R33 billion in 2020/21 and R10 billion in 2021/20.

“Loans impose a particular discipline on you that if you borrow money, you have to pay it back and manage your cash in a way in which you live within your means, constantly bearing in mind that you have repayments to make. So it imposes a different kind of discipline.

“Eskom has had loans before… which later were converted to equity. It’s good to bring back discipline and begin to do all the things we said we would do,” said Gordhan.

Difficult times come with sacrifice

Meanwhile, Public Service and Administration Minister Senzo Mchunu welcomed the announcement to cut down on government perks and wastage.

During his speech, Mboweni announced measures to freeze the salaries of executives in a bid to cap the ballooning government wage bill as well as banning business class travel for members of the executive across all spheres of government for all domestic flights.

“The statement as a whole by the Minister of Finance is realistic in seeking to make South Africans aware of the real situation. The situation itself is quite a serious one if you look at the fiscus and our economy, especially on the side of non-growth.

“We can’t cry. We can’t complain. We have to exercise leadership. We have to take responsibility, which I think the statement is making very clear.

“The good thing is this involves sacrifice on everyone’s part. It involves the elected representatives at all levels. Tomorrow, we will have a better South Africa,” said Mchunu. –