by The Alternative Information & Development Centre (AIDC)
South Africa’s growing public debt is being used as a means to legitimise deepening austerity without seriously questioning if it is true that the debt is not manageable, or whether it can be managed differently. Here, we need to interrogate the relationship between the government owned PIC and the government debt.
The Public Investment Corporation (PIC) is the asset manager for the Government Employees Pension Fund (GEPF) and holder of large sums of public assets. Thinking creatively about PIC can be the key to fixing the debt problem at Eskom and other State Owned Enterprises (SOEs) (Chapter 3). This booklet also looks at unlocking investment for job creation and at combating deepening austerity (Chapter 4). The final chapter (5) looks at governance in the context of widespread and deep corruption. The booklet illustrates how the PIC and the GEPF could be a means to address all of these issues simultaneously.
In July 2019, the Minister of Finance, Tito Mboweni, announced that the government will introduce a Special Appropriation Bill (SAB) to bailout Eskom, taking R59 billion from the national budget over the 2019/20 and 2020/21 budget years. The Bill was finally approved in October, with a commitment to continue servicing Eskom’s debt for ten years. A total of R105 billion has already been taken from the National Revenue Fund to support Eskom’s debt service.
Whilst the need to bailout Eskom seems to be unavoidable, tapping into the government’s budget has resulted in the deepening of the austerity agenda. The budget cuts will especially negatively impact public service delivery like education and health for example.
We argue that the national budget must not be used to support looted and indebted State Owned Enterprises (SOEs). Instead, Eskom should be rescued by using the surplus resources of the GEPF, which the PIC is managing. A loan at zero percent or below market interest rates – coupled with conditions on how to transform Eskom – would shift GEPF’s investments away from shares and into bonds specifically made to deal with the SOE debt crisis. This is critical to saving Eskom (and other SOEs) and South Africa from more austerity and privatisation.
Download the booklet here.