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Finance Minister Tito Mboweni told Parliament’s finance committees that the blockade had virtually halted the economy and that the government was unable to raise revenue.
Finance Minister Tito Mboweni. Image: @ TreasurySA / Twitter
CAPE TOWN – Finance Minister Tito Mboweni said some malfunctioning state-owned companies would be sold.
Mboweni told Parliament’s finance committees that the blockade had virtually stopped the economy and that the government was unable to raise revenue.
He said he had opposed the continued ban on the sale of alcohol and cigarettes, but that he “lost the battle” in the cabinet and that he had to abide by his decision.
Mboweni painted a grim picture of the impact of the blockade, and the Treasury warned that job losses could range from three million to more than seven million, depending on how long it lasts.
Tito Mboweni said that while the struggling Earth Bank was “too big to fail,” other state-owned companies consuming cash did not deserve more bailouts and should be eliminated.
“There are some state-owned companies that don’t deserve any kind of financing and we will be making a big mistake if we continue to finance them simply on the basis that they are state-owned. Am I going to promise you that?” Will there be no sales from any state company? The answer is no because there will be sales. And that is privatization. There will be sales of some public companies that are malfunctioning and we need to grab the bull by the neck and deal with this issue. “
Mboweni did not name state companies. When South Africa approached the IMF to receive funds from COVID-19, it said that negotiations had not yet started.
“It is a long process, which will take several weeks … but we have not closed the window.”
South Africa is seen as a middle-income country by the IMF and financing could come at an interest rate of one percent. But Mboweni said he understood that there would be no conditions associated with any loan.
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