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 on Tuesday, also citing the cost of support for troubled power utility Eskom.
Mboweni was addressing parliament on a special appropriation bill that will make an extra 59 billion rand (US$4.24 billion) available to Eskom, which has more than 400 billion rand of debt and is struggling to supply power to households and businesses.
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.
President Cyril Ramaphosa has staked his reputation on cleaning up corruption, problems at state-owned enterprises and reviving growth Africa’s most developed economy, but sluggish growth and issues at Eskom are proving difficult to fix.
Eskom, which supplies more than 90% of the country’s electricity but was forced to implement power cuts this year, fails to generate sufficient profit to meet its debt servicing costs and has required state cash injections to stay afloat.
The latest allocation, sourced from the government’s National Revenue Fund, provides 26 billion rand for the 2019/20 financial year and 33 billion rand for 2020/21, Reuters reported on Monday.
Mboweni also said he expects to announce the appointment of a chief restructuring officer for Eskom later on Tuesday.