Despite cash-flow pressures that have left contractors strained, government is confident of a full recovery by mid-November, backed by strong economic growth, contained inflation and E2.7 billion in budget support that is now before Parliament.
This was the message from Minister for Finance Neal Rijkenberg during his Finance in Focus update on Monday, where he painted a picture of an economy that is growing faster than expected, but with households still feeling the pinch.
The Minister was frank about the current challenges. Treasury is behind on payments for capital projects, particularly those implemented through the Ministry of Public Works and Transport and Microprojects.
“At the moment we are a bit behind on payments for capital projects through the Ministry of Works as well as through Microprojects and some contractors under stress there,” he said.
But he said government has not been idle. For the past 18 months, his team has been working to secure budget support loans a process he described as extremely difficult to qualify for.
“In fact the one that we are raising with African Development Bank (ADB) we have been working on for like 18 months. It is just so difficult to qualify for budget support from these entities but they have been working well with us,” he said.
That work has now paid off. Rijkenberg tabled two facilities in Parliament about E1.1 billion from the African Development Bank (ADB) and about E1.6 billion from Standard Bank South Africa.
“So we are getting assistance from both of those banks, about E1.1 billion from ADB and about E1.6 billion from Standard Bank. These have been tabled, we really hope that we can get them through quite quickly,” he said.
The Minister is optimistic that legislators will fast-track the approvals. “The MPs I think will be very supportive because they are also under massive pressure in their constituencies because these projects are not going ahead as they should and so I’m confident that parliament will give us full support to get them through quickly and to give that relief,” he said.
If Parliament approves the loans as expected, Treasury expects to wipe out the backlog. “When that relief comes we are confident that we’ll pay everything that we have outstanding at Treasury and catch up on payments 100 per cent, hoping for by mid-November that we will actually have that money to make these payments,” he said.
Keep Up to Date with the Most Important News
