The board of the Public Investment Corporation has assured the more than 230 000 government employees that their pension monies are safe.
Non-executive PIC directors joined CEO Dan Matjila and the Treasury leadership to allay fears that the corporation is being raided to fund
state owned Enterprises.
Minister of Finance Malusi Gigaba has noted with concern media reports that National Treasury wants to use R100-billion of the funds in the Public Investment Corporation (PIC) to bail out State Owned Enterprises (SOEs). The Minister would like to clarify that these reports are untrue. No formal or informal request has been sent to the PIC for such funds.
The Minister finds these reports malicious and unconstructive. Such untrue reports deviate attention from what is important – finding a long-term solution that will ensure that SOEs continue to contribute to our economic development without being a burden on the fiscus.
Statement issued on behalf of the Ministry of Finance, 25 September 2017
Fin24 ~ Finance Minister Malusi Gigaba said reports that National Treasury wanted to dip into the funds of the Public Investment Corporation (PIC) to bail out state-owned enterprises (SOEs) were untrue.
“There is no attempt to dip into pensions for reasons that are unscrupulous,” Gigaba told reporters in Pretoria after a meeting with the board of the PIC.
The media briefing was scheduled after reports claimed that Treasury was seeking to use PIC funds to finance struggling government entities such as South African Airways (SAA).
Over the weekend PIC boss Dan Matjila was quoted in an interview in the Sunday Times as saying that certain people “wanted the keys to the PIC”, and were lobbying to dismiss him.
The PIC has almost R1.9trn in assets and handles pension funds for South African government workers, including nurses and teachers.
But Matjila – who was seated next to Gigaba – dismissed the Sunday Times’ interview as inaccurate, saying that the article was “distasteful, inaccurate, and designed to drive wedge between minister, myself and the board”.
He didn’t expand on how his comments were misconstrued, saying he would issue a statement to clarify the matter on Wednesday.
Director-general of the Treasury Dondo Mogajane said they were in constant contact with SAA creditors to negotiatiate a settlement that was acceptable regarding the national airline.
Mogajane said there were in talks about how to fund SAA and some would be presented to Cabinet on Wednesday.
He also confirmed that SAA had asked the PIC for a R6bn loan in May.
Matjila said this was not unusual, as state-owned enterprises often asked the PIC to invest in their bonds. The PIC had done due diligence on the airline, but the carrier fell short of the money manager’s investment criteria, he said.
Alf Lees MP, DA Shadow Deputy Minister of Finance
The DA welcomes Finance Minister, Malusi Gigaba’s, press briefing on the matter of the Public Investment Corporation (PIC) and funding for SAA.
However, National Treasury must urgently clarify how the airline’s funding requirements that are required in a mere four days are going to be met and whether section 16 of the Public Finance Management Act will be invoked again.
Rather than making matters ‘clear and clean’ as suggested by Treasury Director General, Dondo Mogojane, the press briefing has raised more questions than answers.
The Ministers and Director General of National Treasury confirmed that:
• Treasury has had extensive discussions with the PIC on possible funding for the SAA bailout;
• Some lenders to SAA will not extend some or all of their loans to SAA beyond Saturday; and
• There is no possibility of a Special Appropriations Bill in time to secure funding to meet the SAA lenders repayment deadline.
Despite what was confirmed, the uncertainty over how the SAA funding crisis is going to be dealt with remains.
This uncertainty cannot remain until the Medium Term Budget Policy Speech (MTBPS) process is completed and the people of South Africa cannot afford to be left in the dark as to the details of the full recapitalisation plan for SAA that Treasury says will amount to R10 billion in the current 2017/18 financial year.
This uncertainty will have a negative impact on the South African sovereign ratings and must be clarified long before the MTBPS.