Ramaphosa says pay up; SA debt crisis; Mashaba quits; Boeing rocked; Pound perks up

By Jackie Cameron

  • President Cyril Ramaphosa has called on citizens to pay their electricity bills. Eskom is owed about R24bn. Bloomberg reports that, by the end of March, the Soweto area in southwestern Johannesburg owed R18bn alone, Eskom said in July. “This is the time for a frank discussion on the payment of owed money to Eskom by individual users,” he said. “Boycotting payment for services had a place in apartheid South Africa. It was an effective tool to mobilise communities against an unjust system. But it has no place in present-day South Africa. If public utilities like Eskom are to survive, then all users need to pay for the services they receive,” said Ramaphosa.
  • With the National Treasury’s medium-term budget due for release toward the end of the month, economists in a Bloomberg survey expect a fiscal gap of 6.1% of gross domestic product for this year as money for Eskom, the public broadcaster and national airline sap resources, reports Bloomberg. Eskom’s debt is threatening South Africa’s standing in the international investment community. Billions of dollars in bailouts for the power utility will probably widen the budget deficit to the biggest since the financial crisis, threatening the nation’s remaining investment-grade credit rating, reports Bloomberg. With the National Treasury’s medium-term budget due for release toward the end of the month, economists in a Bloomberg survey expect a fiscal gap of 6.1% of gross domestic product for this year as money for Eskom, the public broadcaster and national airline sap resources. That’s compared with the Treasury’s 4.5% February estimate and would be the biggest gap since 2010.
  • Herman Mashaba said he will quit as mayor of Johannesburg, a major blow to the main opposition party that rules South Africa’s economic hub and has been battling to quell infighting within its ranks, reports Bloomberg. The Democratic Alliance appears determined to collapse a cooperation agreement it concluded with the Economic Freedom Fighters, the third-biggest party, to rule the city – a serious misstep ahead of municipal elections in 2021, Mashaba told reporters on Monday. He also criticised the party’s decision to elect its former leader Helen Zille as its chairwoman, saying the move bolstered a faction in the party whose values he did not share.
  • Offshore investors sold a net R1.38bn ($94m) of South African stocks last week and bought more than R4bn in bonds, says Reuters, which was reporting on data from the Johannesburg Stock Exchange.
  • Wall Street kicked off the week on an upbeat note on Monday after the United States and China showed some signs of progress in resolving their trade war, but a fall in Boeing’s shares pressured the blue-chip Dow index, says Reuters. Shares of Boeing Co, says the news agency, were on track for their worst two-day fall in over a decade as multiple brokerages downgraded the stock after leaked messages from a former test pilot showed he might have unintentionally misled regulators about the safety of the grounded 737 MAX jet.
  • Sterling traded near a five-month high amid speculation Prime Minister Boris Johnson will eventually be able to win parliamentary backing for his Brexit deal, says Bloomberg. The pound clung to the $1.30 mark, even as House of Commons Speaker John Bercow rejected the government’s attempt to bring back the divorce agreement for debate Monday, says the news wire. A vote on the deal failed at the weekend and that pressured sterling at the market open. But the British currency has since recovered, with strategists arguing that any dip would prove short-lived, and approval for the deal may ultimately be possible. UK government bonds slid and stocks advanced. “With the parliamentary vote likely to be decided by fine margins, sterling failed to build on gains after breaching the $1.30 mark. The UK prime minister needs to garner support of 61 Members of Parliament to back his deal – he likely has 62,” according to a Bloomberg analysis.