South Africa’s 2019/20 tax revenues could be “significantly lower” than budgeted for and it may need to borrow more than planned, Finance Minister Tito Mboweni said Tuesday.
He cited the cost of support for troubled power utility Eskom as a major contributing factor.
Mboweni was addressing parliament on a special appropriation bill that will make an extra R59 billion available to Eskom, which has more than R400 billion of debt and is struggling to supply power to households and businesses.
The extra R59 billion is on top of the R69 billion announced in his Budget Speech.
R26 billion will be allocated in the fiscal year ending March 2020 and R33 billion allocated in the fiscal year ending March 2021.
Mboweni said the lower tax receipts and additional costs related to Eskom “could substantially increase the government’s borrowing requirements for 2019/20.”
The government will have to revise its funding strategy and weekly bond issuance to “levels beyond what we had planned,” he added.
Eskom, which supplies more than 90% of South Africa’s electricity, has failed to generate sufficient profit to meet its debt servicing costs and has required state cash injections to stay afloat.
Once this Bill has been passed, Mboweni said, “We will be in a position to use the contingency reserve account to provide support to the SABC, Denel and SAA.”
But, the finance minister emphasized, “This support will be released in chunks as certain conditions are met to ensure that there is progress in improving the organisations.
As of tomorrow, we will announce the Chief Restructuring Officers of these institutions.”
Mboweni says public broadcaster SABC wants R3.2 billion but, “it won’t be made available tomorrow. That would be a mistake.”