By Paul Vecchiatto
(Bloomberg) – South Africa’s government won’t consider using quantitative easing to help rescue troubled state power utility Eskom Holdings SOC Ltd., Deputy Finance Minister David Masondo said.
Also read: The A, B, Cs of QE: Quantitative easing for beginners
“I don’t believe that something like quantitative easing will be able to help Eskom as the situation between South Africa and other countries is totally different,” Masondo told lawmakers in Cape Town on Wednesday. “Countries that have used quantitative easing had zero percent interest rates and that is not the situation here.”
Eskom is saddled with more than R440bn ($31bn) of debt and isn’t generating enough income to cover its operating costs and interest payments. The government is currently finalising details of a R230bn bailout plan to help the utility remain solvent.
Also read: Experts say huge injection from taxpayers is still not enough to save Eskom
The option of resorting to quantitative easing was first raised by Ace Magashule, the secretary-general of the ruling party.
