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Mboweni warns lockdown could see millions lose jobs, says some SOEs to be sold

Finance Minister Tito Mboweni told Parliament’s finance committees that the lockdown had brought the economy to a virtual standstill and that the government could not collect revenue.

Finance Minister Tito Mboweni. Picture: @TreasurySA/Twitter

CAPE TOWN - Finance Minister Tito Mboweni said that some poorly functioning state-owned enterprises would be sold.

Mboweni told Parliament’s finance committees that the lockdown had brought the economy to a virtual standstill and that the government could not collect revenue.

He said that he had opposed the continued ban on the sale of alcohol and cigarettes but “lost the battle” in Cabinet and had to abide by its decision.

Mboweni painted a grim picture of the impact of the lockdown, with Treasury warning that job losses could range between three million to more than seven million, depending on how long it lasts.

Tito Mboweni said that while the struggling Land Bank was "too big to fail", other cash-guzzling state-owned companies weren’t worth further bailouts and should be gotten rid of.

"There are some SOEs which are not deserving of any funding at all and we’ll be making a big mistake if we continue to fund them purely on the basis that they’re state-owned. Am I going to promise you that there’ll be no sales of any SOEs? The answer is no because there will be sales. And that is privatisation. There will be sales of some of the poorly functioning SOEs and we need to grab the bull by the scruff of its neck and deal with this matter."

Mboweni did not name the SOEs. On South Africa approaching the IMF for COVID-19 funding, he said that negotiations had yet to start.

"It’s a long process, which will take a number of weeks… but we’ve not closed the window."

South Africa is seen as a middle-income country by the IMF and funding could come at a one percent interest rate. But Mboweni said hat he understood that there would be no conditions attached to any loan.