State airline bailout raises hackles at South African treasury

South African National Treasury officials are reluctantly complying with orders to find funds to bail out the state airline, fearing they may erode the nation’s fiscal credibility, according to two people familiar with the matter. The National Treasury is trying to re-prioritize funds in the medium-term expenditure framework due next month to fill the funding hole at SAA, said the people. The money will have to come from other government departments and programs, and may undermine efforts to revive an economy that’s been battered by the coronavirus pandemic, they said. SAA, which last made a profit almost a decade ago and has been reliant on state bailouts to survive, has been in administration since December. Finance Minister Tito Mboweni has long argued that the government can’t continue funding the national carrier, putting him at odds with the top leadership of the ruling African National Congress and Public Enterprises Minister Pravin Gordhan, who insist it must keep flying. Mboweni lost the battle, with SAA’s administrators assuring its creditors last week that the cabinet had committed to providing more than 10b rand ($591m) needed to effect a reorganization of the carrier and avoid its liquidation. Mboweni won’t resign over the decision, one of the people said.<br/>