Economists have issued a serious warning as they fear public pension funds will be used to fill Eskom’s massive black debt gap.
Mike Schussler shares other economists’ fears and says that such rumors have been around for 11 months. Eskom’s debt burden may rise to R600bn over the next few years, and businessmen reckon Eskom will not get rid of the huge debt burden again unless skilled people take control and get rid of the hundreds of redundant workers.
South Africans’ pension funds are in the ANC’s sights and the governing party may be able to prescribe future asset managers of these funds how to invest their money.
It is believed that they are striving to receive funds for “socially productive investments (such as housing, social and economic development infrastructure and township economies) and job creation”.
Intellidex economist Peter Attard Montalto, in response to the ANC’s election manifesto, said on Sunday the item in the manifesto would shock asset managers. Another thing in the election manifesto that will surprise local asset management industry is that the ANC wants to prescribe where big investors such as asset managers and pension funds should invest their money.
Pres. Cyril Ramaphosa announced the manifesto on Saturday at the Moses Mabhida Stadium in Durban.
Montalto points out that the proposals are in line with what was decided at the National Congress in December 2017 at Nasrec, but this is the first time that it has been set out in the election manifesto.
Montalto expects the issue will lead to a debate on coercion on asset managers and banks to lend money to state-owned enterprises such as Eskom or SAA to keep them alive.
The DA’s finance spokesperson, Alf Lees, believes that prescribing asset managers to invest their money is exactly what the apartheid government used when desperate and when they could no longer obtain capital in international markets.
“Instead of announcing new initiatives to stimulate economic growth and job creation, the ANC has decided to simply” expropriate “ordinary South Africans’ savings to save state-owned enterprises such as SAA and Eskom,” he said.
Rather than announcing new initiatives to stimulate economic growth and job creation, the ANC has decided to simply “expropriate” ordinary South Africans’ savings to save state-owned enterprises such as SAA and Eskom.
Another consequence of the manifesto is that tensions can be invigorated between the ANC government and the South African Reserve Bank, as the ANC explicitly expresses itself in favor of a “flexible monetary policy that fits into the objectives of the second phase of transition. “.
According to Montalto, it refers to the ANC’s “national democratic revolution”, and after the debate in the ANC that the Reserve Bank interferes more purposefully in the economy to promote job creation.
Montalto does not believe any change in the Bank’s mandate is to be expected under the bank’s current leadership and with Finance Minister Tito Mboweni, but the election manifesto implies that the ANC will want to change the bank’s mandate later.
The ANC now also exposes the Reserve Bank to criticism because it would be against the “second phase of transition” if it were to raise interest rates.
“An independent institution should not be placed in such a position by laying down a political criterion for rating. This complicates the debate on nationalization against which the Reserve Bank is fighting, “Montalto said.
This complicates the debate on nationalization against which the Reserve Bank is fighting.
Reserve Bank president Lesetja Kganyago has repeatedly said the bank should remain independent to do its job after the ANC said at its policy conference in December 2017 that the bank should be nationalized, and amid the public protector’s investigation into the bank and recommendation to change its mandate.
The Reserve Bank’s mandate is to protect the value of the rand for the benefit of a stable economy, but some factions in the ANC want the bank to make extra effort to help create jobs.
Read said in a statement he was going to ask Mboweni more details on the ANC election manifesto’s statements about changing the Bank’s mandate.
He expects when the election manifesto’s proposals become reality, it will discourage foreign investors and lead to further credit ratings by international credit rating agencies.
Sources: Vryburger, Times Live, Citizen
SA-news editing team