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Nene hints at financial assistance for struggling SOEs

Government has already in recent weeks extended guarantees for SA Express and Denel, both of which are in a liquidity crisis.

FILE: Finance Minister Nhlanhla Nene pictured on 25 February 2015, when he delivered his 2015 Budget Speech in the National Assembly, Parliament, in Cape Town. Picture: GCIS.

CAPE TOWN - Finance Minister Nhlanhla Nene has hinted there could be financial assistance for struggling state-owned entities (SOEs) when he delivers his first medium-term budget next month.

The government has already in recent weeks extended guarantees for SA Express and Denel, both of which are in a liquidity crisis.

Nene says SOEs represent a major risk to the fiscal framework and reforms are required to put these companies on a more sustainable footing.

The minister says the government’s principle is that as far as possible, financial support to SOEs should not widen the deficit.

In a parliamentary reply to Cope leader Mosiuoa Lekota, Nene says this can be achieved by selling non-core assets, reprioritising spending and other revenue measures.

He says part of the reform process for SOEs will be to determine the cost of their developmental mandates to provide the government with a better idea of the support they require for non-commercial activities.

Another reform measure will be to determine how to bolster their commercial activities, through a combination of efficiency improvements and private sector participation.

Nene says any support for SOEs will be considered as part of the broader budget process which is currently underway.

(Edited by Winnie Theletsane)

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