R254-billion in debt relief from the government over the next three years, provided it partially privatises the country’s electricity transmission network and coal-fired plants and takes steps to improve its performance.
President Cyril Ramaphosa, who is expected to lead the ANC into its toughest election battle since the end of apartheid next year, has appealed to Eskom to suspend the tariff hikes of as much as 18.7%. Opinion polls show the party risks losing its national majority. The state will also directly take over as much as R70-billion of Eskom’s loan portfolio in the 2026 fiscal year by converting the obligations to government debt that will be financed by issuing short- and long-term domestic loans.The government hasn’t yet discussed the debt-relief plan with Eskom’s creditors, though it has been shaped by feedback from ongoing engagements, said Duncan Pieterse, the head of the treasury’s asset and liability management unit.
Government debt will probably peak at 73.6% of GDP in 2026 — a higher level and three years later than previously expected. Debt service costs — the fastest growing expenditure line item for about a decade — will increase to almost 20% of main budget revenue. That’s even as the government uses higher-than-expected tax revenue to pay down debt and rein in the budget deficit.Debt relief for Eskom is contingent on the company meeting predetermined performance targets.
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