South Africa Won’t Consider Quantitative Easing to Help Eskom

(Bloomberg) -- South Africa’s government won’t consider using quantitative easing to help rescue troubled state power utility Eskom Holdings SOC Ltd., Deputy Finance Minister David Masondo said.

“I don’t believe that something like quantitative easing will be able to help Eskom as the situation between South Africa and other countries is totally different,” Masondo told lawmakers in Cape Town on Wednesday. “Countries that have used quantitative easing had zero percent interest rates and that is not the situation here.”

Eskom is saddled with more than 440 billion rand ($31 billion) of debt and isn’t generating enough income to cover its operating costs and interest payments. The government is currently finalizing details of a 230-billion rand bailout plan to help the utility remain solvent.

The option of resorting to quantitative easing was first raised by Ace Magashule, the secretary-general of the ruling party.

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Saving Eskom Trumps South African Budget Gap, Masondo Says (1)

To contact the reporter on this story: Paul Vecchiatto in Cape Town at pvecchiatto@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, Mike Cohen, Rene Vollgraaff

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