Mid-term budget: ‘Tough love’ for Post Office, which faces liquidation

Finance Minister Enoch Godongwana said a “tough love” approach will be adopted regarding the South African Post Office because “there’s no money in the adjustments [estimates of national expenditure]”. 

Godongwana tabled the medium-term budget policy statement in parliament on Wednesday, which  coincided with “Day Zero” when the Post Office is expected to run out of cash reserves required for its operations, a situation that could see it wound up and more than 5 000 jobs lost.

Business rescue practitioners previously told the Mail & Guardian that if they do not receive a second tranche of R3.8 billion owed to them by the treasury for the process, the Post Office would be liquidated. 

The initial R2.4 billion was dispatched when the entity went into business rescue a year ago.

“What budget statement was it when I said we need to give tough love to these SOEs? [state-owned enterprises]. We are still committed to that principle,” Godongwana said at a media briefing on Wednesday ahead of his speech to parliament.

“There is an opportunity cost when you keep putting money into underperforming SOEs because you end up underfunding something else.”

The treasury did not allocate any new funds to struggling state-owned entities in the medium-term budget, citing the ongoing financial difficulties faced by these companies, which include Denel, Transnet, the Land Bank and the South African National Roads Agency. Godongwana noted that the government had paid R520 billion in bailouts from the 2008-09 financial year to date. 

“We have been asking the department in charge of the Post Office what its plans are for it because we will give it R3 billion, assuming we had it, then what? It asks for another? What is the future of the institution moving forward?” he said.

The finance minister said the treasury had met the department of communications to reflect on options, one of which is getting private partners to invest in the Post Office.

“The second option is finding savings within the department to be able to bridge the gaps, but the department will have the final say. We are still working with them in making decisions around where and how resources can be shifted,” he said.

Earlier this month, Communications Minister Solly Malatsi said the consideration of a privatisation scenario was a preferred option to save the Post Office.