New funding framework will not affect budget deficit: Nene - CNBC Africa

New funding framework will not affect budget deficit: Nene

Southern Africa

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Finance Minister, Nhlanhla Nene. PHOTO: GCIS

This is according to the country’s Finance Minister, Nhlanhla Nene.

The new framework is aimed at raising funding for state-owned companies and could see government make use of non-strategic assets to raise resources for financial support as well as private investment, in order to strengthen the balance sheets of these entities.

The South African government also presented tighter financial reporting requirements for public entities.


“Over the medium term, any funding of state-owned companies will be contingent on the implementation of sound restructuring plans with strong government oversight,” National Treasury said.

(READ MORE: SAA receives additional R6.48 billion guarantee)

It added that the country’s national carrier, South African Airways (SAA) would have to work hard to get itself back on track.

“National Treasury is working with SAA in revising and refining the existing LTTS, which will have the primary mandate of the returning the airline to financial sustainability,” it said.

“Importantly, SAA must be self-sustaining as no recapitalisation will be forthcoming from the shareholder, and SAA will therefore be required to generate the required profits to return the airline to financial sustainability.”

(READ MORE: SAA increases capacity on several African routes)

Earlier this year, the country’s government raised 6.488 billion rand to assist the national airline.

“SAA’s continued losses - details of which management has explained today - resulted in Government adopting the “Business Unusual” approach to stabilize and contain SAA’s financial bleeding,” said Treasury.