A joint meeting of the South African Parliament’s Standing Committee on Finance and Select Committee on Finance, held on 3 July, has heard how the country’s bleak financial outlook as a result of the Covid-19 pandemic is requiring significant action to reduce the economic effect of the disease and associated lockdown, including major reform within state-owned enterprises such as local defence company Denel.
Examining public submissions on the country’s proposed supplementary budget for 2020, representatives from the Treasury noted that South Africa had entered the Covid-19 pandemic at a time when it was already in a weak fiscal position. The result of this had meant that the country was needing to identify pathways out of the forthcoming economic crisis, which ranged from stimulus packages to austerity measures, as the potential threat of a 50% unemployment rate looms.
South Africa is working to respond to the economic impact of Covid-19, with plans for reforming Denel taking shape. (Getty Images)
Proposals highlighted in a presentation by the Treasury also included reforming several of the country’s state-owned enterprises to generate cost savings and capital for the government. The bulk of these organisations had been in an uncertain financial position prior to the Covid-19 pandemic and state support was seen as an added cost burden for taxpayers. Airlines South African Airways and SA Express have been recommended for closure following the failure of business rescue plans, while diamond-mining company Alexkor has also been recommended for closure, with its assets transferred to the state-owned African Exploration Mining and Finance Corporation and mining operations consolidated under the single organisation.
Looking to read the full article?
Gain unlimited access to Janes news and more...
