Economist says SAA bailout should be injected elsewhere
An economist says the SAA bailout, announced in the mini-budget yesterday, should've been allocated to other government structures, that benefit South Africans.
Mike Schussler says while thousands of jobs will be saved, the cash injection was a compromise over healthcare services and food security.
Finance Minister, Tito Mboweni announced our struggling public carrier would receive R10.5 billion towards its business rescue plan.
He projected an economic contraction of 7.8% this year and a 5 billion rand tax increase for 2021/2022.
"The fact of the matter is they are fine that some ministers have gotten their way and we going to see a lot more SOEs start screaming for a bailout and I'm not sure how productive that will be," said Schussler.
"We got a raw deal as a population as well in the sense of nearly 25 cents of every rand in taxes will now go to debt repayment from next week onwards and that's not a good picture for us."
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The allocation is in addition to the R16.4 billion rand allocated to the entity in the February budget.
Last month the airline suspended all operations as it waited for government to provide it with funding.
Finance Minister, Tito Mboweni says this will go towards SAA's restructuring.
"This allocation is funded through reductions to the baselines of national departments, public entities and conditional grants."
This allocation is in addition to the R16.4 billion allocated over the 2020 MTEF in the February budget for settling guaranteed debt and interest.
"Our approach is in line with the principle that funding to state-owned enterprises must come from within the current framework and reprioritised from elsewhere," said Mboweni.
