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Business Recorder
4 hours ago
- Business
- Business Recorder
Budget FY26: APCC proposes historic Rs4.083trn outlay
ISLAMABAD: The Annual Plan Coordination Committee (APCC) on Monday recommended the highest-ever national development outlay of Rs4.083 trillion of the country's history and a GDP growth target of 4.2 percent for the upcoming fiscal year 2025-26 for the approval of the National Economic Council. The meeting was informed that the proposed National Development Outlay of Rs4.083 trillion for the next fiscal year Rs1 trillion Federal PSDP, Rs288 billion for State-Owned Enterprises (SOEs) investment and Rs2.795 trillion. The APCC met here under the chairmanship of the Federal Minister for Planning and Development Ahsan Iqbal. It was also attended by senior federal and provincial representatives, including secretaries, principal accounting officers, and planning officials from Gilgit-Baltistan (G-B) and Azad Jammu Kashmir (AJK). Ministry seeks Rs1.6trn PSDP: FY26 budget on June 2 The session was convened at a critical juncture as Pakistan seeks to navigate significant economic and geopolitical challenges while continuing to implement its long-term development agenda under URAAN Pakistan. Addressing the participants, the minister emphasized that despite limited fiscal space and competing demands, the government remains fully committed to sustaining development momentum through strategic realignment of resources and policy reforms. He noted that when the current government assumed office in early 2024, it inherited an economic landscape marked by constrained revenues, pressing foreign obligations, and structural imbalances. However, with a clear vision and decisive leadership, the Planning Commission mobilised stakeholders around a common development framework—URAAN Pakistan—which aims to transform Pakistan into a $1 trillion economy by 2035 and a $3 trillion economy by 2047. The minister reiterated that the federal government believes that the success of URAAN Pakistan depends on close coordination with provincial governments and the alignment of all tiers of development planning with national priorities. During the meeting all the provinces appreciated Minister Planning's personal and dedicated efforts for the transparent and collaborative planning process — especially the mechanisms put in place to ensure smooth project implementation and timely fund releases. They gave positive feedback on how streamlined approvals are speeding up development and helping deliver results on the ground. Together, Pakistan is building a more connected, efficient, and prosperous Pakistan. During the meeting, a detailed review of PSDP 2024–25 was presented. It was noted that the National Economic Council (NEC) had approved a National Development Outlay of Rs3,792.3 billion, which included Rs1,400 billion for the Federal PSDP, Rs2,095.4 billion for Provincial ADPs, and Rs196.9 billion for SOEs. However, due to financial constraints, the federal PSDP was later reduced to Rs1,100 billion. As of 31st May 2025, Rs1,036 billion had been authorized for release, and Rs 596 billion had been utilized. A total of 1,071 projects were included in the PSDP, with an approved cost of Rs13,427 billion, of which Rs3,216 billion had already been spent by June 2024. A throw-forward liability of Rs. 10,216 billion remains, underscoring the urgent need for project rationalization and financial discipline. The minister highlighted that there is a dire need to increase the development budget of the country, which has direct bearing on growth and job creation. However, due to fiscal discipline agreed with IMF government is constrained to not increase PSDP. The only way to increase development spending is to increase the revenues by increasing Tax/GDP ratio from 10 per cent to 16-18 per cent. He said that by being lowest tax paying economy we can't aspire to grow. Every tax paying citizen must become partner of the government in rooting out the menace of tax theft. The government has undertaken number of reforms to overhaul tax administration. To ensure maximum value for the investment in development sector, the ministry has taken multiple reviews of project performance, including quarterly and mid-year reviews for better investment efficiency. A comprehensive assessment of the ongoing project portfolio was conducted. As a result, over 118 slow-moving or redundant projects, mostly approved at the DDWP level, were recommended for capping or closure, potentially saving Rs1,000 billion and freeing resources for high-impact initiatives. Moreover, the Planning Commission facilitated re-appropriations of Rs84 billion to fast-moving projects and critical interventions, while Rs80 billion were reallocated through TSGs for emergent national priorities such as the solarisation of tube wells in Balochistan. Looking ahead to FY 2025–26, the minister announced that the proposed PSDP has been restructured in line with core principles of sustainability, impact, and equity. The Finance Division, after consultations with the IMF, has firmed up an Indicative Budget Ceiling of Rs1,000 billion for the federal PSDP, including Rs270 billion in foreign aid. The PSDP 2025–26 portfolios have been developed following extensive consultations with ministries and provinces through Priority Committee meetings and high-level reviews chaired by the Deputy Prime Minister and Advisor to the Prime Minister. The final recommendations reflect a strict prioritisation of ongoing high-impact, foreign-aided, and near-completion projects. In total, 1,120 projects have been included in the proposed PSDP, of which a significant number are designed to be completed within the next 3–4 years if fiscal space is maintained. Pakistan faces serious challenge of water security therefore Diamer Bhasha Dam is given top priority. Hyderabad-Sukkur Motorway will be started during 2025-26. Balochistan will get highest share in development funds of nearly Rs250 billion. Sectoral allocations have been finalised with Rs644 billion allocated to infrastructure, including Rs332 billion for transport and communications and Rs144 billion for energy. Rs150 billion has been proposed for the social sector, including Rs63 billion for education and higher education and Rs22 billion for health. Special areas like AJK and GB will receive Rs63 billion, while Rs70 billion has been allocated for merged districts of Khyber Pakhtunkhwa. Science and IT sectors have been allocated Rs53 billion, while Rs9 billion has been proposed for governance. Production sectors, including food, agriculture, and industries, will receive Rs11 billion. In addition, State-Owned Enterprises have submitted development plans amounting to Rs288 billion, with major contributions from entities like WAPDA, NTDC, OGDCL, and others. The minister informed the participants that one of the most serious challenges has been the increasing tension and security risks following the events of May 7, 2025, when hostilities broke out along the eastern border. This conflict has led to increased defence spending requirements and exerted additional pressure on the already limited development budget. He candidly acknowledged the dilemma faced by the government: choosing between critical national defense and the developmental needs of the people. However, he reassured participants that the government remains committed to maintaining a careful balance. The minister stated that the strength of a nation lies not just in its defense capabilities, but also in the health, education, and economic empowerment of its citizens. The government will not allow Pakistan's development journey to be derailed. Instead, it will adopt innovative planning, smart budgeting, and rigorous monitoring to ensure that the needs of both defense and development are addressed. The APCC also deliberated on critical policy reforms. It endorsed the proposal to stop at-source deduction of Cash Development Loans (CDL) from PSDP funds, as this practice hampers project cash flows and delays implementation. The Committee reiterated the policy that provincial nature projects should be funded by provinces, except in cases involving strategic national interest or implementation in deprived regions. Furthermore, the APCC recommended imposing a moratorium on DDWP-level project approvals during the tenure of the IMF programme, except in exceptional cases with full justification and review by the CDWP. It was also proposed that no development funds be diverted to recurring expenditures during the fiscal year. Ahsan Iqbal reiterated the federal government's unwavering resolve to transform adversity into opportunity. He emphasized that Pakistan's current economic path, though challenging, is also full of potential. URAAN Pakistan provides the guiding vision, rooted in five core pillars: Exports, E-Pakistan, Energy and Infrastructure, Environment and Climate Resilience, and Equity, Ethics and Empowerment. Through this framework, the government aims to restore public trust, inspire innovation, and unlock economic potential across all sectors and regions. He called upon all stakeholders—federal ministries, provincial departments, development partners, and the private sector—to move forward with shared commitment and unity of purpose. He concluded by stating, 'We are not just managing a budget we are shaping the future. The world may see limitations, but we see opportunities. Our history is full of moments when the Pakistani nation rose above challenges through resolve and resilience. This is one such moment. Together, let us rise and lead Pakistan towards sustainable development, economic dignity, and national pride. URAAN Pakistan is not just a programme—it is the spirit of our national ambition.' Earlier, talking to journalist Ahsan Iqbal has said that fiscal space will be provided in the next Public Sector Development Program (PSDP) for the projects of strategic importance envisioned under Uraan Pakistan. The minister mentioned that these projects include Diamer Bhasha Dam, Sukkur Hyderabad motorway project, N-25 in Balochistan and Karakoram highway phase two. The minister emphasised the need for greater synergy between the development projects of the center and the provinces for early completion of national priority projects. Ahsan Iqbal said that projects with foreign component and those nearing completion have also been prioritised in the PSDP. He said allocations for special regions such as AJK, Gilgit Baltistan and the tribal districts have also been prioritised. He said that an effort has been made to align the development budget with national priorities while staying within limited resources. Iqbal said that over 118 different projects worth Rs1,000bn were scrapped due to limited resources, adding that the country has to make difficult decisions about limiting the ongoing projects. Only key projects can be prioritised due to limited funds, the planning minister said, adding that the provincial-level projects should now be completed by the provinces themselves. 'Provinces have far more resources than the federation,' he added. The minister said that everyone must play their part in national development. Shedding light on the upcoming budget, the minister said that the economic size target for next year had been set at Rs129 trillion. 'This year's development budget has been set at Rs1,000 billion,' he added. The minister said that Rs150bn had been allocated for the social sector and Rs70bn for KP's merged districts in the next budget. 'GDP growth target for the next fiscal year was set at 4.2%,' Iqbal said, adding that the target for exports was set at $35bn. Earlier, giving a blueprint of the annual PSDP for the next fiscal year at the APCC meeting, he said that fiscal space will be provided in the next PSDP for the projects of strategic importance envisioned under Uraan Pakistan. He mentioned that these projects include the Diamer Bhasha Dam, Sukkur Hyderabad motorway project, N-25 in Balochistan and Karakoram highway phase two. The minister emphasised the need for greater synergy between the development projects of the Centre and the provinces for the early completion of national priority projects. He said that projects with a foreign component and those nearing completion have also been prioritised in the PSDP. The minister elaborated that the said allocations for special regions such as AJK, Gilgit-Baltistan and the tribal districts have also been prioritised. The minister further said that an effort has been made to align the development budget with national priorities while staying within limited resources. Copyright Business Recorder, 2025
Business Recorder
7 hours ago
- Business
- Business Recorder
APCC proposes historic Rs4.083trn outlay
ISLAMABAD: The Annual Plan Coordination Committee (APCC) on Monday recommended the highest-ever national development outlay of Rs4.083 trillion of the country's history and a GDP growth target of 4.2 percent for the upcoming fiscal year 2025-26 for the approval of the National Economic Council. The meeting was informed that the proposed National Development Outlay of Rs4.083 trillion for the next fiscal year Rs1 trillion Federal PSDP, Rs288 billion for State-Owned Enterprises (SOEs) investment and Rs2.795 trillion. The APCC met here under the chairmanship of the Federal Minister for Planning and Development Ahsan Iqbal. It was also attended by senior federal and provincial representatives, including secretaries, principal accounting officers, and planning officials from Gilgit-Baltistan (G-B) and Azad Jammu Kashmir (AJK). Ministry seeks Rs1.6trn PSDP: FY26 budget on June 2 The session was convened at a critical juncture as Pakistan seeks to navigate significant economic and geopolitical challenges while continuing to implement its long-term development agenda under URAAN Pakistan. Addressing the participants, the minister emphasized that despite limited fiscal space and competing demands, the government remains fully committed to sustaining development momentum through strategic realignment of resources and policy reforms. He noted that when the current government assumed office in early 2024, it inherited an economic landscape marked by constrained revenues, pressing foreign obligations, and structural imbalances. However, with a clear vision and decisive leadership, the Planning Commission mobilised stakeholders around a common development framework—URAAN Pakistan—which aims to transform Pakistan into a $1 trillion economy by 2035 and a $3 trillion economy by 2047. The minister reiterated that the federal government believes that the success of URAAN Pakistan depends on close coordination with provincial governments and the alignment of all tiers of development planning with national priorities. During the meeting all the provinces appreciated Minister Planning's personal and dedicated efforts for the transparent and collaborative planning process — especially the mechanisms put in place to ensure smooth project implementation and timely fund releases. They gave positive feedback on how streamlined approvals are speeding up development and helping deliver results on the ground. Together, Pakistan is building a more connected, efficient, and prosperous Pakistan. During the meeting, a detailed review of PSDP 2024–25 was presented. It was noted that the National Economic Council (NEC) had approved a National Development Outlay of Rs3,792.3 billion, which included Rs1,400 billion for the Federal PSDP, Rs2,095.4 billion for Provincial ADPs, and Rs196.9 billion for SOEs. However, due to financial constraints, the federal PSDP was later reduced to Rs1,100 billion. As of 31st May 2025, Rs1,036 billion had been authorized for release, and Rs 596 billion had been utilized. A total of 1,071 projects were included in the PSDP, with an approved cost of Rs13,427 billion, of which Rs3,216 billion had already been spent by June 2024. A throw-forward liability of Rs. 10,216 billion remains, underscoring the urgent need for project rationalization and financial discipline. The minister highlighted that there is a dire need to increase the development budget of the country, which has direct bearing on growth and job creation. However, due to fiscal discipline agreed with IMF government is constrained to not increase PSDP. The only way to increase development spending is to increase the revenues by increasing Tax/GDP ratio from 10 per cent to 16-18 per cent. He said that by being lowest tax paying economy we can't aspire to grow. Every tax paying citizen must become partner of the government in rooting out the menace of tax theft. The government has undertaken number of reforms to overhaul tax administration. To ensure maximum value for the investment in development sector, the ministry has taken multiple reviews of project performance, including quarterly and mid-year reviews for better investment efficiency. A comprehensive assessment of the ongoing project portfolio was conducted. As a result, over 118 slow-moving or redundant projects, mostly approved at the DDWP level, were recommended for capping or closure, potentially saving Rs1,000 billion and freeing resources for high-impact initiatives. Moreover, the Planning Commission facilitated re-appropriations of Rs84 billion to fast-moving projects and critical interventions, while Rs80 billion were reallocated through TSGs for emergent national priorities such as the solarisation of tube wells in Balochistan. Looking ahead to FY 2025–26, the minister announced that the proposed PSDP has been restructured in line with core principles of sustainability, impact, and equity. The Finance Division, after consultations with the IMF, has firmed up an Indicative Budget Ceiling of Rs1,000 billion for the federal PSDP, including Rs270 billion in foreign aid. The PSDP 2025–26 portfolios have been developed following extensive consultations with ministries and provinces through Priority Committee meetings and high-level reviews chaired by the Deputy Prime Minister and Advisor to the Prime Minister. The final recommendations reflect a strict prioritisation of ongoing high-impact, foreign-aided, and near-completion projects. In total, 1,120 projects have been included in the proposed PSDP, of which a significant number are designed to be completed within the next 3–4 years if fiscal space is maintained. Pakistan faces serious challenge of water security therefore Diamer Bhasha Dam is given top priority. Hyderabad-Sukkur Motorway will be started during 2025-26. Balochistan will get highest share in development funds of nearly Rs250 billion. Sectoral allocations have been finalised with Rs644 billion allocated to infrastructure, including Rs332 billion for transport and communications and Rs144 billion for energy. Rs150 billion has been proposed for the social sector, including Rs63 billion for education and higher education and Rs22 billion for health. Special areas like AJK and GB will receive Rs63 billion, while Rs70 billion has been allocated for merged districts of Khyber Pakhtunkhwa. Science and IT sectors have been allocated Rs53 billion, while Rs9 billion has been proposed for governance. Production sectors, including food, agriculture, and industries, will receive Rs11 billion. In addition, State-Owned Enterprises have submitted development plans amounting to Rs288 billion, with major contributions from entities like WAPDA, NTDC, OGDCL, and others. The minister informed the participants that one of the most serious challenges has been the increasing tension and security risks following the events of May 7, 2025, when hostilities broke out along the eastern border. This conflict has led to increased defence spending requirements and exerted additional pressure on the already limited development budget. He candidly acknowledged the dilemma faced by the government: choosing between critical national defense and the developmental needs of the people. However, he reassured participants that the government remains committed to maintaining a careful balance. The minister stated that the strength of a nation lies not just in its defense capabilities, but also in the health, education, and economic empowerment of its citizens. The government will not allow Pakistan's development journey to be derailed. Instead, it will adopt innovative planning, smart budgeting, and rigorous monitoring to ensure that the needs of both defense and development are addressed. The APCC also deliberated on critical policy reforms. It endorsed the proposal to stop at-source deduction of Cash Development Loans (CDL) from PSDP funds, as this practice hampers project cash flows and delays implementation. The Committee reiterated the policy that provincial nature projects should be funded by provinces, except in cases involving strategic national interest or implementation in deprived regions. Furthermore, the APCC recommended imposing a moratorium on DDWP-level project approvals during the tenure of the IMF programme, except in exceptional cases with full justification and review by the CDWP. It was also proposed that no development funds be diverted to recurring expenditures during the fiscal year. Ahsan Iqbal reiterated the federal government's unwavering resolve to transform adversity into opportunity. He emphasized that Pakistan's current economic path, though challenging, is also full of potential. URAAN Pakistan provides the guiding vision, rooted in five core pillars: Exports, E-Pakistan, Energy and Infrastructure, Environment and Climate Resilience, and Equity, Ethics and Empowerment. Through this framework, the government aims to restore public trust, inspire innovation, and unlock economic potential across all sectors and regions. He called upon all stakeholders—federal ministries, provincial departments, development partners, and the private sector—to move forward with shared commitment and unity of purpose. He concluded by stating, 'We are not just managing a budget we are shaping the future. The world may see limitations, but we see opportunities. Our history is full of moments when the Pakistani nation rose above challenges through resolve and resilience. This is one such moment. Together, let us rise and lead Pakistan towards sustainable development, economic dignity, and national pride. URAAN Pakistan is not just a programme—it is the spirit of our national ambition.' Earlier, talking to journalist Ahsan Iqbal has said that fiscal space will be provided in the next Public Sector Development Program (PSDP) for the projects of strategic importance envisioned under Uraan Pakistan. The minister mentioned that these projects include Diamer Bhasha Dam, Sukkur Hyderabad motorway project, N-25 in Balochistan and Karakoram highway phase two. The minister emphasised the need for greater synergy between the development projects of the center and the provinces for early completion of national priority projects. Ahsan Iqbal said that projects with foreign component and those nearing completion have also been prioritised in the PSDP. He said allocations for special regions such as AJK, Gilgit Baltistan and the tribal districts have also been prioritised. He said that an effort has been made to align the development budget with national priorities while staying within limited resources. Iqbal said that over 118 different projects worth Rs1,000bn were scrapped due to limited resources, adding that the country has to make difficult decisions about limiting the ongoing projects. Only key projects can be prioritised due to limited funds, the planning minister said, adding that the provincial-level projects should now be completed by the provinces themselves. 'Provinces have far more resources than the federation,' he added. The minister said that everyone must play their part in national development. Shedding light on the upcoming budget, the minister said that the economic size target for next year had been set at Rs129 trillion. 'This year's development budget has been set at Rs1,000 billion,' he added. The minister said that Rs150bn had been allocated for the social sector and Rs70bn for KP's merged districts in the next budget. 'GDP growth target for the next fiscal year was set at 4.2%,' Iqbal said, adding that the target for exports was set at $35bn. Earlier, giving a blueprint of the annual PSDP for the next fiscal year at the APCC meeting, he said that fiscal space will be provided in the next PSDP for the projects of strategic importance envisioned under Uraan Pakistan. He mentioned that these projects include the Diamer Bhasha Dam, Sukkur Hyderabad motorway project, N-25 in Balochistan and Karakoram highway phase two. The minister emphasised the need for greater synergy between the development projects of the Centre and the provinces for the early completion of national priority projects. He said that projects with a foreign component and those nearing completion have also been prioritised in the PSDP. The minister elaborated that the said allocations for special regions such as AJK, Gilgit-Baltistan and the tribal districts have also been prioritised. The minister further said that an effort has been made to align the development budget with national priorities while staying within limited resources. Copyright Business Recorder, 2025
IOL News
5 days ago
- Business
- IOL News
Is ANC cadre deployment causing the downfall of South Africa's state-owned enterprises?
Experts shed light on how cadre deployment has led to the collapse of state-owned enterprises. Image: Henk Kruger / Independent Newspapers The majority of people employed as chief executives, executives, and board members in state-owned entities are incompetent, do not know the sectors they operate in, are without skills, and don't even know what they are doing, experts say. Governance, economic, and political experts say that South African leaders lack the political will to fix the problems. The SOEs have cost the country billions of rand in bailouts. Many of them are struggling with massive debt, under-investment in infrastructure, and continuous reliance on government bailouts. Eskom, Transnet, South African Airways, Denel, and the South African Broadcasting Corporation (SABC) have accumulated significant losses and debt. The Treasury has since announced that no funds have been allocated to struggling SOEs. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Professor William Gumede from the Wits School of Governance said incompetence is the main issue, resulting from hiring unskilled, politically connected people. 'Most of the CEOs, most of the boards, most of the executives are appointed because of their political connections. So, people are not appointed based on merit. They do not know what they are doing, they don't know how to manage an organisation, and they also don't know the sector where they are operating. 'Sometimes you may not know the sector, but if you are very well skilled, you'll be able to turn around something. But now, often what happens with politically connected people that get appointed is they don't know the sector, are also not competent, so you have a double destruction of entities,' Gumede said. He added that the second problem is corruption, where procurement processes are manipulated based on Black Economic Empowerment. 'They don't appoint capable black-owned companies, they appoint politically connected companies, who don't deliver. 'So you (SOEs) pay for services that don't get delivered. Many of these companies inflate the prices. So, there are double and triple payments for products and services, for no delivery. They suck the money out of the entities without delivering services also. 'Even if there was corruption, if services are delivered, at least one could say that at least services are being rendered, but now there are no services and there is no money left. 'So, now you are left with management and board members without appropriate skills, not knowing the sector, not knowing the entity, and then they run the entity into financial distress. And then you have your empowerment process, which has been abused and manipulated, and you lose money there also,' he explained. He added that another challenge is that many of the entities are very unionised. And the unions are aligned with the ANC as part of the Tripartite Alliance. 'Often, union members can't be fired by the entities because they just go to the union. And the union will protect them, or it will even go straight to the president. I know, at Eskom for example, instances where senior union leaders, who are part of the staff, and when the CEO wants to fire them, they actually phone the president straight. 'So, it means they are untouchable, they don't have to work. They don't have to be efficient, they don't have to be effective, and they cannot be fired,' he said. Gumede highlighted that at almost every level in the SOEs, there is political capture and interference. 'No one can be held accountable, no one can be fired. You can't fire the board, you can't fire the management, because they are all politically connected. You can't fire your staff because they are trade union connected, you can't fire the companies that don't deliver, because they are also politically connected. 'When the entities are bailed out, they are bailed out with the same things in place, so you've got the same management; you have the same board, the same staff, the same procurement companies that cannot be fired. So, the money just disappears into a hole all the time,' Gumede said. He said one of the moral hazards created by bailouts is that most people ideologically believe state companies should not close down because they create jobs. 'Bailing out a company without holding management and companies accountable is like throwing money into a bottomless pit. In fact, bailing out state entities is a misallocation of government resources. 'Black people who are competent but not politically connected get marginalised, they don't get jobs or promotions. Even competent black-owned companies get sidelined because they are not politically connected, and this becomes a lost opportunity to get the right people to turn things around,' Gumede said. 'Some of the entities must close down. If you can't improve performance even after a bailout, you have to close down, just like in the private sector.' He said the various SOE reform initiatives, such as Operation Vulindlela and the National State Enterprises Bill, don't reform anything, but waste state money and people's time. These bills miss the mark because people should be hired based on merit and fired if they don't perform. He said ordinary citizens are not doing enough. 'They must stop voting for political parties that fail to deliver. They must hold the entities accountable. They must be vocal about these issues,' he said. Politicians should not appoint the CEOs and boards of SOEs. That must be professionalised or left to an independent panel, and there must be public transparency in the process. Also, employees must be depoliticised, he said. Gumede was part of the 2009 Presidential Review Commission on SOEs, however, these have not been implemented despite being approved and adopted by the Cabinet. Under President Cyril Ramaphosa's administration, he was part of the Task Team on the Professionalisation of Public Services, and says that the recommendations have not been implemented. Professor Sipho Seepe, a political analyst from the University of Zululand, said there are no hurdles that stand in the way of the effective implementation of SOE reforms other than a political will. He said SOEs have been reduced to employment agencies for the politically connected. 'If the number one citizen (Ramaphosa) can be allowed to avoid accountability as far as the Phala Phala scandal is concerned, how can we expect lowly public servants not to do the same. The president must lead by example. So far, he has failed dismally. Until then, we should not be surprised that there is a general failure insofar as proper governance is concerned.' Dawie Roodt, a chief economist from Efficient Group, said: 'If there's one institution that I would like to blame for how we got here (failing SOEs), it is the ANC. Ideologically, the ANC believes and talks about the developmental state and centralisation. 'Secondly, they've got the policy of cadre deployment, and what often happens is that they employ people in positions because they are loyal to the party and not because they can do the job. Quite often, you find incompetent people in high positions. Thirdly, you often find very high levels of corruption. So, the combination of all these things inevitably then leads to the collapse of these state-owned enterprises.' Roodt said many of these SOEs are crucial to the economy. Eskom, for example, is important, but gradually, the economy is weaning itself off Eskom by putting in solar panels. Harbours are still very important for exports, and the railways. 'In the past, you had various levels of government. The lowest level of government is local authorities, which have their revenue sources, own tax base, and balance their books. They did not need the Minister of Finance. 'The same goes for the SOEs. The state-owned enterprises could wash their faces. They had their revenue sources, good-rated debt, like Eskom's debt. At one stage, it was better rated than the state's debt. They could stand on their own feet financially, but what has subsequently happened, not only at the state-owned enterprises, but local authorities, because of mismanagement and cadre deployment, they have been run into the ground operationally and financially. Those institutions now need to be bailed out by the central (national) government,' Roodt said. According to Roodt, the Minister of Finance has his problems, as the Department of Finance and others have been mismanaged. And in the process, state debt levels have reached a record high, but it's much worse than what we think because, since the SOE and local authorities are also depending on the state. He said there is a need to fix the country's political leadership before things can improve. One must look at the Zondo Commission's report and ask oneself why it has not been implemented. 'The problem is they are not prepared to act, and to enforce the laws. Zondo did all the work, and the reason why that has not been implemented is that the cadres are implicated. Proof is there for everybody to see; all they need to do is start prosecuting, but it is simply not happening. So if they don't implement the Zondo Commission report, then I do not have any hope that they will start acting against corruption,' Roodt said.
The Star
5 days ago
- Business
- The Star
Tensions rise between Garuda and pilots' union over recruitment
The Garuda Pilot Association has urged President Prabowo Subianto and State-Owned Enterprises Minister Erick Thohir to conduct a thorough evaluation of the newly appointed management at the airline. — The Jakarta Post JAKARTA: Tensions are rising between flag carrier Garuda Indonesia and its pilots over disputes regarding the new leadership's hiring policy. The Garuda Pilot Association (APG), part of Garuda's employee union, has urged President Prabowo Subianto and State-Owned Enterprises (SOEs) Minister Erick Thohir to conduct a thorough evaluation of the newly appointed management at the airline. This came after the recent recruitment of several former employees of Lion Air, the country's largest private airline, a move APG described as one of the main sources of conflict between management and staff. 'We've identified several irregularities in the recruitment process that must be reviewed, particularly from a good corporate governance standpoint,' APG vice-president Rendy Wiryo Kusumo was quoted by Tempo as saying. Mufti Anam, lawmaker at the House of Representatives' Commission VI, which oversees SOEs, raised similar concerns during a meeting in May, citing unverified reports that the new hires were paid from 25 million rupiah to 117 million rupiah, adding roughly one billion rupiah to Garuda's monthly payroll expenses. The pilots union deemed the amount as unusual and criticised the move as inconsistent with a push from the government and the company for cost efficiency. It urged management to conduct an evaluation to ensure the airline's sustainability, in upholding safety standards and delivering top-tier services to customers. Garuda reported a US$75.9mil net loss in the first three months of this year. Last year, it reported a US$29.9mil net loss. The airline had just averted bankruptcy after it acquired creditor approval to restructure its liabilities in mid-2022. The hiring decision also raised eyebrows, as Garuda Indonesia's current chief executive officer (CEO) Wamildan Tsani Panjaitan, appointed by the SOEs ministry last November, is a former CEO of Lion Air. Beyond the hiring controversy, the union has also flagged poor communication between Garuda's management and employee representatives. APG accused the management of viewing the union as an adversary rather than a strategic partner, noting that the company even reported several union leaders to the police over public statements. The union condemned the abrupt halt of automatic payroll deductions for union membership fees, interpreting the move as a sign of bad faith that further strained labour relations. — The Jakarta Post/ANN
The Citizen
23-05-2025
- Business
- The Citizen
Here is how much Sars boss and others in the government earn
Sars commissioner Edward Kieswetter was paid more than R8 million without a performance bonus. You might expect that the salaries of bosses at state-owned enterprises (SOEs) would be significantly different from those of leading private companies. After all, SOEs are funded by the public and meant to serve the nation, while private companies are driven by profit. But in reality, the difference in pay is surprisingly small. The main distinction lies in where the money comes from. Executives at SOEs are paid with taxpayers' money, because they are public servants working in structures that are supposed to prioritise public interest over profit. On the other hand, private sector CEOs are typically rewarded based on the company's performance, earning their pay from the profits they help generate. How much the Sars commissioner gets A clear example of this can be found in the person responsible for motivating South Africans to pay their taxes, the commissioner of the South African Revenue Service (Sars). Over the past two financial years, Sars commissioner Edward Kieswetter has earned more than R10 million annually. However, Sars is not viewed as an SOE; it is an autonomous agency of the South African government. Even if SARS underperforms and fails to meet its revenue targets, the commissioner still walks away with over R8 million a year. The figures were given by Finance Minister Enoch Godongwana in a parliamentary response to DA MP Jan Naudé de Villiers. ALSO READ: Capitec CEO tops banking pay charts — but how do staff salaries compare? A look at how SA's top five banks pay Performance bonus for Sars commissioner De Villers asked the minister to outline for each SOE that reports to him how much they received in salaries for the financial years 2023-24 and 2024-25. He further asked for a breakdown of the remuneration package, which includes basic salary, performance bonuses and allowances. Godongwana said Kieswetter's basic salary is R8 043 195.36, while his allowances and contributions are worth R161 502.60. His total cost to company (without performance bonuses) is R8 204 697.96. The minister's reply said that the commissioner has not received a 2024/2025 performance bonus. However, for the financial years 2023/2024, he received R2 000 000.00 and for 2022/2023, he received R2 425 324.85. Guidelines for paying the commissioner De Villers' question asked: 'How does this remuneration compare to the prescribed limits set out in the department of public service and administration's remuneration guidelines?' The minister replied: 'Sars is governed by the Sars Act 34 of 1997, which established it as an organ of state within the public administration, but as an institution outside the public service, therefore, as such Sars is not a state-owned enterprise (autonomous) and is not subject to the DPSA's remuneration guidelines.' ALSO READ: Salary survey shows gap between increases and inflation narrowing Development Bank of South Africa (DBSA) Godongwana also revealed how much the CEO of the Development Bank of South Africa (DBSA), Boitumelo Masoka earns. For the 2023-2024 financial year, the CEO's total earnings were R10.5 million, including guaranteed pay, allowances, benefits and variable pay. For the 2024-2025 financial year, her total earnings were R15.5m, inclusive of guaranteed pay, allowances, benefits and variable pay. 'The DBSA's remuneration is not governed by the department of public service and administration guidelines.' Financial institutions Financial Sector Conduct Authority (FSCA) commissioner Unathi Kamlana earns R5 879 952.00. His basic salary per month is R442 221.39. The director of the Financial Intelligence Centre (FIC), Pieter Smit, has a total cost to the company of R3 615 000. The minister did not detail how this amount is made up. Others The principal executive officer for the Government Employee Pension Fund (GEPF), Musa Mabesa, earns a basic salary of R4 034 894.07 and has a cellphone allowance of R69 554.04. He has a non-pensionable cash allowance of R2 185 567.57 and a retirement fund contribution of R504 361.80. His total cost to company is R6 794 377.48. The minister's response included the packages of the Landbank CEO, Independent Regulatory Board of Auditors (IRBA) boss, acting HOD of the Government Technical Advisory Centre (GTAC), Government Pension Administration Agency CEO, Accounting Standard Board (ASB) CEO, Office of Pension Fund Adjudicator (OPFA) boss, Ombud Council CEO, South African Special Risk Insurance Association (Sasria) CEO and executive team of Office of the Ombud for Financial Services Providers. NOW READ: Here's what some of South Africa's SOE bosses earn
