Treasury has confirmed that it will transfer R2,3bn from the National Revenue Fund (NRF) to SAA to avoid the national carrier defaulting on a loan from Standard Chartered Bank.
A statement from government said this would be done “in terms of section 16 of the Public Finance Management Act”. This legislation allows Finance Minister, Malusi Gigaba, to authorise the use of funds to provide money to pay for expenditure of an exceptional nature for an entity that does not currently have funds allocated to it, and cannot wait for funds to be allocated at a later stage.
Treasury said the use of this legislation was a last resort, as a default by the airline would have increased the perception of risk on the rest of the guarantees on SAA’s loans, leaving the NRF with then having to pay out further funds.
Treasury further justified its decision, saying the airline “remains a strategic asset and in its role as the flag carrier, it serves as an economic enabler with direct and indirect benefits across a wide range of economic activity”.
