Business

Masondo: You want to buy out Reserve Bank or you want to save Eskom?

2019-07-10 10:55

The difficult state of government finances could have an impact on the debate around whether the SA Reserve Bank should stay private or be nationalised.

Deputy Minister of Finance David Masondo spoke to City Press last week after a function to launch the SA Revenue Service (Sars) tax season.

“The issue for us is how much is it going to cost to buy out private shareholders and should we do it under this difficult fiscal environment?

“You want to buy out the Reserve Bank [investors] or you want to save Eskom – those are the political choices you need to make,” said Masondo, who was appointed on May 30.

“I don’t know how much it would cost. At this stage, I can’t say we can or cannot afford it. All I was saying is that if the amount is too huge and we cannot afford it then we need to make choices given the financial constraints we have.

“If it is R1, sure we can. If it is millions or billions of rand, we’ll have to say let’s think carefully about this. Maybe not now, maybe when we have a better financial position,” Masondo said.

He said buying out central bank private shareholders was not something unusual as the Reserve Bank was one of the few central banks in the world that had private shareholders.

“There is nothing untoward as far as this issue is concerned,” he said.

“The second issue is around the mandate of the Reserve Bank.

“The mandate of the Reserve Bank is clearly articulated in the Constitution – which is that we need to protect the currency and pursue price stability – in the interests of balanced growth.

“There is nothing that has changed as far as that is concerned.”

Regarding the R230 billion Eskom bailout announced by President Cyril Ramaphosa in his state of the nation address last month, Masondo said details regarding the bailout “would be tabulated in the Special Appropriation Bill”.

Ntsakisi Mahlangeni, National Treasury spokesperson, said Finance Minister Tito Mboweni would table the Special Appropriation Bill in the “next week or so but it must first go through Cabinet”.

Last week the joint meeting of the standing and select committees on appropriations in Parliament was briefed on Mboweni’s authorisation of a R17.652 billion payment to Eskom in April.

“National Treasury told the meeting that Eskom had experienced difficulty in servicing its debts and meeting its redemption requirements which could have had negative consequences for both Eskom and the national fiscus,” Parliament said.

The April payout was part of the R23 billion allocation announced in this year’s budget, which was tabled in February.

“A Special Appropriations Bill for additional funds to support state-owned companies will be tabled by National Treasury later in the year,” Parliament said.

Turning to the position of Eskom chief restructuring officer, Masondo said that when Mboweni outlined the Special Appropriation Bill “he would also say here is the figure and he would report progress on how far we are on Eskom”.

Regarding the numerous calls from state-owned enterprises for bailouts, Masondo said: “We are concerned about that. They are a drain on the fiscus.”

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November 10 2019