Ramaphosa defends govt’s decision to pump billions into recapitalising SAA
Deputy President Cyril Ramaphosa was challenged in Parliament over why the government was throwing good money after bad to keep the airline afloat.
CAPE TOWN - Deputy President Cyril Ramaphosa says the government had no option but to pump billions into recapitalising South African Airways (SAA) because letting it fail would have catastrophic consequences for the economy.
Ramaphosa has been answering questions in the National Council of Provinces (NCOP) on Wednesday afternoon.
Ramaphosa was challenged over why the government was throwing good money after bad to keep the airline afloat.
“If the government were to fold its arms and allow SAA to fail it would be a real catastrophe, not only for SAA but for our economy as well.”
Ramaphosa explained that the government is the guarantor of last resort for the debt carried not only by SAA but a number of state-owned enterprises.
“Now if SAA were to default that defaulting would run right across other government guarantees. Government has given, not only to SAA, to Transnet, to Eskom, to Prasa and a number of other government-owned entities”
It would mean the government would have to repay that debt in one go, with further impact on the bonds it has issued and a catastrophic effect on the country’s credit rating.
“So those who argue this is throwing good money after bad [they] don’t understand what they’re talking about because it would be bad money right across the board.”
(Edited by Zamangwane Shange)