South Africa finance minister warns of tough times
South Africa’s Finance Minister Tito Mboweni has warned that the country faces tough economic times because it is spending much more than it earns.
Mounting government debt, record unemployment and unprofitable state-owned companies have all contributed to the economic malaise in Africa’s most industrialised economy.
Economic growth has been revised down from 1.5 % to only 0.5% this year.
Mr Mboweni, delivering his medium-term budget in parliament, painted a bleak picture of state-owned power utility Eskom and said it would not receive any more bailouts until it showed that its turnaround strategy was proving effective .
Eskom’s debt of $30bn (£23bn) presents the biggest risk to the economy and the government has already provided two bail-outs this year, totalling more than $8bn.
The crisis at Eskom has led to power cuts, affecting both homes and businesses.
The picture at state-owned South African Airways, which is insolvent, is bleaker.
Mr Mboweni indicated that the company is unlikely to ever generate enough cash to sustain itself, and suggested that the company should enter into talks with prospective equity partners.