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The Democratic Alliance (DA) has criticized the signing of an agreement between work, business and government as a “stealth bailout” that will jeopardize state pensions.
“The agreement signed today in the National Council for Economic and Labor Development (NEDLAC) between work, company and government, initially proposed by Cosatu, amounts to a betrayal of workers and the general public, who will end up paying when the government no longer be able to pay public pensions, ”said DA shadow Finance Minister Geordin Hill-Lewis.
The agreement was signed on December 8 at the 25th Annual NEDLAC Summitand believes that the Public Investment Corporation (PIC) and other parties are committed to supporting Eskom’s financial future.
The pact includes a proposal for the conversion of more than R280 billion in Eskom’s debt into equity.
Hill-Lewis said that without approval from the Government Employees Pension Fund (GEPF), however, the PIC cannot continue.
“It is unlikely that the GEPF will be able to approve such an obviously bad investment because it will be contrary to its fiduciary duty to its members (who are current and future retirees) and therefore will be illegal,” he said.
“Without the agreement of the GEPF, today’s signing ceremony was an irrelevant exercise in futility.”
Stealth rescue
The district attorney said he would fight to oppose this proposal, which he called a “stealth bailout,” as it would only result in the government bailing out GEPF instead of Eskom.
“The proposed ‘conversion’ of more than R $ 80 billion in Eskom debt into ‘equity’ is a sham,” said Hill-Lewis.
“There is no prospect that the PIC will get a return on this investment from Eskom.”
“This means there will be a giant hole left in the GEPF funds, which in turn means that the government will have to bail out the GEPF in the future,” he said.
For this reason, he inferred that the government will essentially bail out Eskom through government pensions.
However, he also warned that due to the state of South African finances, the government may not be able to bail out the state pension fund, which could destroy many South African pensions.
“And that’s why workers shouldn’t take the risk and why this scheme should stop now,” Hill-Lewis said.
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