Real R1 trillion cost of national Eskom bailouts over MTEF equals 5 times the funding for the entire WC Gov over same period

8 August 2023

As a result of National Government taking on Eskom debt, gross loan debt will rise from R4.73 trillion in the 2022/23 financial year (71.1% of GDP) to R5.84 trillion (73.6% of GDP) in 2025/26. This includes debt servicing cost that will be compounded over the Medium-term Expenditure Framework (MTEF) 3-year period.

This was revealed on Friday, during a briefing by the Financial and Fiscal Commission (FFC) to the Western Cape Budget Committee on their recommendations on the 2023/24 Division of Revenue to National Treasury.

This comes after National Government committed to bailing out Eskom to the tune of R254 billion over the 2023/24 MTEF, more than enough to fund the entire Western Cape Government’s projected budget over the same period.

The Division of Revenue is the process by which national, provincial and local government shares of national tax revenue are allocated by National Treasury.

In addition, high inflation has seen interest rates rise throughout the year, which will further compound the debt servicing costs of National Government, leaving even less money available for frontline services.

According to the FFC, the exemption of Eskom from specific Public Finance Management Act (PFMA) regulations by the National Government also increases the risk of financial mismanagement, corruption, and other malfeasance, at an entity where corruption and incompetence are already a culture.

Government has paid R162 billion to financially distressed SOEs over the past 12 years, with Eskom receiving 82% of the total amount.

MPP Deidré Baartman: “Provincial Governments provide frontline services such as healthcare, education and infrastructure, including housing, to their residents. That it why it is especially unacceptable that National Government is spending more than three years’ worth of critical services’ funding on bailing out the ANC-created black hole that is Eskom.

The amount of debt taken on will essentially have no effect on the services our residents depend on, and interest payments will further eat into provincial and municipal budgets through the ANC’s tendency to pass along budget cuts to the other spheres of government.

The DA in the Western Cape has for years called for a serious review of the way government funding is divided, and will keep on fighting for money that makes it possible for the DA-run Western Cape Government to make a tangible difference in the lives of our residents, as opposed to simply pouring more money down the drain of mismanaged and corrupt SOE’s.”

Issued by Deidré Baartman, DA Western Cape Spokesperson on Budget, 8 August 2023