State Owned Enterprises and Local Governments In Chaos

Budget crisis after budget crisis is rippling through state-owned enterprises and also local governments and their departments.

The Eastern Cape health department is experiencing a budget shortfall of over R2.5 billion. If the department does not come up with a plan to resolve its cash crisis, it would be placed under national administration.

Yesterday, news came that (surprise, surprise) SAA’s balance sheet was also in dire straits, and requires up to R6 billion worth of funding in cash from government so it doesn’t need to dip into working capital to fund investment spending.

As state owned enterprises and local governments fail one after the other, the burden is shifted to the balance sheet of the central government. Said differently you, the taxpayer.

This is a massive problem for the single reason that government is unfortunately such a big part of the economy. Prepare for major tax increases in the future.