26 February 2010
	Discipline parastatals Dion George, MP, Democratic Alliance

In 2010/2011 the nonfinancial parastatals, mentioned in your Cover Story (February 19), will need to borrow R117bn (4,3% of GDP), up from the R104bn they borrowed in 2009/2010. This excludes further bail outs to the Land Bank (R2,5bn), guarantees to the Development Bank of Southern Africa (R15,2bn ) and other bailouts and guarantees (R243bn over the past four years). National debt, excluding municipalities, will rise to R1,4 trillion by 2012/2013 (43% of projected GDP). Debt servicing will become unsustainable at around 50% of GDP. Financial mismanagement of the parastatals is adding significant risk to our macroeconomic stability. The financial model applicable to the parastatals has failed to the extent that warning bells no longer sound from within the system when the financial wheels start coming off. When the Post Office's annual report cost R947/ copy, more than R5/page, nothing in the financial management system kicked in to ask a very simple and obvious question. If no basic financial discipline exists we cannot be surprised when the price tag for these "engines for economic growth" - as proposed by the ANC's so-called developmental state - crowd out more and more of our scarce financial resources. Without any incentive to become efficient, these entities never will. It is possible for the parastatals to attract private investment that will inject much-needed financial discipline - a R20bn investment can also shave 1% off the deficit and reduce the current fiscal haemorrhage. Though finance minister Pravin Gordhan delivered a prudent budget, given difficult circumstances, and said the right things about rooting out corruption and wasteful spending, we need to see action that will be reflected in the numbers on the fiscal framework and, ultimately, in the pockets of hardworking SA taxpayers.