Gigaba says govt-owned properties likely to be sold to aid ailing SOEs

Malusi Gigaba says the government is eyeing state-owned properties with a collective value of about R40 billion to help raise the cash for state-owned entities.

FILE: A South African Airways flight takes off as another one is parked in a bay on the tarmac on 25 May, 2010 at the Johannesburg O.R Tambo International airport in Johannesburg, South Africa. Picture: AFP.

CAPE TOWN - Treasury says policy uncertainty and the precarious financial situation of state-owned enterprises are the major risks to an improved fiscal outlook.

The Budget tabled by Finance Minister Malusi Gigaba makes no allocation for any further bailouts for ailing parastatals, such as South African Airways, South African Express and Denel.

But Gigaba says the government might still have to provide several with financial support this year and it is eyeing state-owned properties with a collective value of about R40 billion to help raise the cash.

Gigaba says a property audit by the Department of Public Works shows that the government owns up to 195,000 properties.

He says this is one of the sources the government will be looking at to raise funds needed to recapitalise ailing state-owned companies, as a major overhaul of the way they are funded and run gets underway.

“We have promised that any spending on state-owned companies will be done in a budget-neutral way, and we still make that commitment, we will have to find resources, probably through the sale of state-owned assets, in order to re-capitalise state-owned companies that need to be re-capitalised.”

He was speaking at a briefing ahead of tabling his Budget, where Treasury Director-General Dondo Mogajane told reporters the possible sale of the government’s Telkom shares was still on the table but would be approached with caution, as this would be like selling the family silver.

Gigaba says state-owned companies are largely financially unsustainable with inadequate funding and operational models and that drastic action is needed.

WATCH LIVE: Gigaba delivers Budget speech


Gigaba has told Reuters that it could take between 18 and 24 months for S&P Global and Fitch to return the country's credit rating to investment grade.

Gigaba says Treasury had "very positive" discussions with ratings agencies on the 2018 Budget he earlier presented to Parliament, in which government has raised value-added tax (VAT) for the first time in 25 years.

The minister on Wednesday outlined tough measures to raise an extra R36 billion for state coffers this year.

He's announced a 52 cents increase in the fuel levy, along with a one percentage point hike in VAT.

“New tax measures raise an additional R36 billion in 2018/19 mainly through a higher VAT rate and below inflation adjustments to personal income tax brackets.”