There's no denying that most of South Africa's parastatals are in trouble. We only need to look at Eskom and South African Airways to know that all is not well. Peter Attard Montalto from Nomura believes that Eskom and other parastatals, such as South African Airways (SAA), should remain key focuses of the Budget Speech.
"The National Treasury must prevent parastatal support from impacting the budget above the line to preserve the sovereign rating," he said.
According to Montalto, it is important that budget announcements are made with regard to parastatals, such as SAA, but Eskom especially, due to the economic challenges that are currently being faced by them. He noted that there is also "sluggishness in job creation, and delays of policy already on the parastatal front."
"SAA is a non-viable entity on a state-alone basis and will, we believe, need additional support from the budget… Eskom now has both an equity and a liquidity problem to be addressed, and we need to see specific details of companies to be sold and projected values and timelines, as well as wider guarantee changes or cash transfers… Tariffs remain a difficult issue for Eskom, which we doubt the budget can provide additional clarity on at this time," he added.