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Creditors recently met to discuss the future of the government’s ‘problem child’ – South African Airways (SAA) – as the R10bn that was promised to bail out the national airline had still not been provided. Administrators took control of SAA in December after almost a decade of financial losses. The DA welcomed the government’s decision to place the carrier into business rescue as it seemed to be the only way to stop it from being a further burden on the economy and taxpayers. However, Alf Lees of the DA says it’s time to pull the plug on the entire operation – swiftly and permanently. His recommendation last week was to liquidate. Unfortunately the government has since decided to ‘reprioritise‘ money from the 2020 national budget to help with SAA’s initial restructuring costs. – Claire Badenhorst
Cabinet should decide to let SAA go
By Alf Lees*
The process of finding money for the SAA vanity project of the ANC is unfolding as expected. President Cyril Ramaphosa has apparently taken the side of Pravin Gordhan and the Department of Public Enterprises over Finance Minister Tito Mboweni and National Treasury. Apparently, Cabinet will formally be asked, this week, to agree to extra budget cuts on top of the just approved Covid-19 cuts in order to make R10.4bn available for the next SAA bailout.
It is astounding that there can be any consideration of budget cuts – which will inevitably impact on front line services such as health, education and policing – when SA had to go cap in hand to the International Monetary Fund (IMF) to borrow money in order to cope with the economic meltdown caused by the irrational Covid-19 lockdown. The IMF has made this loan available to SA at a very low interest rate and the money is certainly not intended to be used to bailout the bankrupt and mismanaged SAA.
The announcement by the SAA business rescue practitioners (BRPs) that the government, including National Treasury, had provided yet another letter of commitment to provide the R10.4bn required by the SAA business rescue plan was, according to our information, clearly misleading. There was apparently no commitment on the part of National Treasury nor Minister Mboweni to cut budgets, or “reprioritise” in the words of the Department of Public Enterprises, in order to fund the umpteenth SAA bailout.
It seems clear that the reason that Les Matuson and Siviwe Dongwana, the BRPs, refused to make the letter from “the Government” public was because it does not stipulate that Minister Mboweni and National Treasury had agreed to move money from other budgeted expenditure in order to make R10.4bn available to SAA. The sorry SAA saga is unfolding much as the Democratic Alliance (DA) predicted. We believe that Minister Gordhan and the SAA BRPs were being obtuse and misled South Africans that National Treasury had agreed to a R10.4bn State funded bailout for SAA.
I repeat my challenge to the BRPs and Gordhan; I dare them to produce the letter that was sent by “Government” to the BRPs on Friday, 18 September 2020, if they dispute this view. It is vital for all South Africans, and SAA employees in particular, to be able to assess what the real picture of bailout funding for the airline really is.
The last chance to stop the madness of yet another SAA taxpayer/IMF bailout at the expense of frontline services now seems to be in the hands of the Cabinet as President Ramaphosa has once again shown that he is too weak to make the hard decisions that are required. We call on the Cabinet to refuse to accept further budget cuts and to instruct Gordhan to do the right thing by letting SAA go to the wall if there are no serious investors ready to take over and provide the R10.4bn required to “rescue” the airline.
- Alf Lees MP is a DA member of the Standing Committee on Public Accounts.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.