Rating agencies and lenders aren’t fools.
According to Outa, the government needs to abandon these plans as they are likely to have the opposite effect and rather put ratings agencies and lenders on high alert when dealing with Eskom.
Outa said that an important aspect of ratings agencies and investment houses’ assessment of Eskom’s ability to manage its cashflow and service its debt obligations relies on trends of a company’s ability to manage and reduce irregular, fruitless and wasteful expenditure. “We are also concerned that an exemption of this nature will now become a precedent for more reporting exemption requests from other entities and municipalities for similar reasons proposed by Eskom,” it said.“The objectives of the PFMA include transparency, accountability and sound financial management. The Auditor-General’s mandate is to act in the best interest of the public and investors rather than the entity.
“The definition of IE is broad and captures any spending emanating from a transgression of any applicable legislation, irrespective of the nature and amount of the transgression.” Treasury said.
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