South African Airways will get the R10.5-billion it has requested from government to fund its business rescue process.

The monies will be made available from reductions from national departments and their entities as well as reductions from local and provincial conditional grants, according to the medium-term budget policy statement which Finance Minister Tito Mboweni tabled in Parliament on Wednesday.

The R10.5-billion is in addition to the R6.5-billion that SAA was allocated in the Budget 2020 for settling its guaranteed debt and interest.

The national carrier, which is insolvent, needs R19.6-billion to implement its business rescue plan, Fin24 previously reported. SAA was placed in business rescue in December 2019, this as it faced a liquidity crisis. Overall the global aviation industry has taken a beating due to the Covid-19 pandemic which led to travel restrictions.

The International Air Transport Association (IATA) particularly expects full-year 2020 passenger numbers in Africa to reach 30% of 2019 base levels, and in 2021 this is expected to strengthen to 45% of 2019 levels.

Airports Company South Africa (ACSA), of which government owns 75%, does not have sufficient funds for its operational requirements, Treasury noted. The travel restrictions have resulted in a decline in air traffic volumes and the medium-term projections are also low, it said. While ACSA has secured short-term bank loans, reduced expenditure and revised its corporate strategy, it has also approached government for possible support.

"Several companies including SAA are insolvent and have insufficient funds to cover operational expenses," the medium-term budget policy statement read. Additional spending pressures from state-owned enterprises (SOEs) remain a risk to the country's fiscal outlook. The Covid-19 pandemic and lockdown restrictions limiting economic activity have increased the financial pressures they face.

Entities such as the SABC, the SA Post Office and Denel are among those who are seeking additional financing given the harsh impact of the Covid-19 pandemic on operations. But no announcements of additional funding for these entities were announced.

According to the medium-term budget policy statement, the Independent Communications Authority of South Africa received R85-million for the licensing of high demand spectrum, this auctioning process is set to be completed by March 2021.

Power utility Eskom, which has a debt burden near R490-billion, also received its allocated R23-billion for this fiscal year.

Eskom has used R320-billion of its R350-billion guarantee so far. Treasury noted that Eskom has made progress in implementing is turnaround plan by achieving cost savings. The lockdown, however, has slashed Eskom's revenue by R9-billion to date, according to its CEO Andre de Ruyter.

The Land Bank, which began defaulting on its debt in April 2020, had government provide it with R3-billion in June 2020 to pay overdue interest from August 2020. The Land Bank however has approached government for additional financial support.

Lenders have called on the guarantees of both Land Bank and SA Express this year, which amounts to R74-million and R143-million respectively.

The South African National Roads Agency (Sanral) is also unable to meet its financial obligations, as it is not generating sufficient cash from toll operations. The shortfall will cost the fiscus an additional R300-million in 2020/21, Treasury said. Sanral has spent R39-billion out of its allocated R37.9-billion, as it pertains to interest related to the guarantees.

The Department of Public Enterprises, which is the shareholder of major SOEs such as Eskom, Transnet, SAA and Denel, among others, will reprioritise funds to support the work of the Presidential SOE Council, Treasury said. President Cyril Ramaphosa appointed the SOE Council in June 2020, but no new developments have been announced since.

Analysts and trade union federation Cosatu had expected more clarity on the future of SOEs, especially turnaround plans, but the medium-term budget policy statement was scant on the details.