JOHANNESBURG – The National Treasury on Wednesday said it had allocated R10.5 billion ($640.8 million) to South African Airways as an in-year adjustment in the Medium-Term Budget Policy Statement (MTBPS), settling weeks of uncertainty over funding for the national carrier’s business rescue plan.

The money is needed for the immediate and mid-term requirements set out in the plan, and delays in securing it saw SAA mothball all operations in early September.

The National Treasury said the funding was availed by trimming the baselines of the budgets of national departments and allocations of local governments.

“This allocation was mainly funded through reductions to baselines of national departments and their public entities, and provincial and local government conditional grants,“ it said.

The allocation comes after commercial banks refused to advance any further loans for the deeply troubled entity.

Finance Minister Tito Mboweni has been openly reluctant to plough more money into SAA, whereas Public Enterprises Minister Pravin Gordhan has been adamant the airline can be saved, despite the global decline in the aviation business.

Mboweni on Wednesday signalled it would take National Treasury years to achieve its debt stabilisation and fiscal consolidation targets after the Covid-19 crisis dramatically increased borrowing and the budget deficit.

Tabling his Medium-term Budget Policy Statement, the minister put the deficit forecast for the current financial year at 15.7 percent of gross domestic product from 6.4 percent in 2019/20.

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