* To guarantee 5 bln rand in loans
* Airline required to develop turnaround plan
(Adds details, background)
JOHANNESBURG Oct 2 South Africa has agreed to
guarantee $600 million in loans for troubled state airline South
African Airways over the next two years, a move that
could put further pressure on the government's strained budget.
The Department of Public Enterprises said in a statement on
Tuesday the 5 billion rand ($600 million) guarantee would
require the airline to develop a turnaround strategy to be
approved by it and the finance ministry.
"The guarantee will enable SAA to borrow from the financial
markets, thus ensuring that the airline continues to operate as
a going concern," it said.
The airline will also be required to provide the government
with its financing strategy for a planned purchase of airplanes,
the department said.
In a sign of growing concern about Pretoria's finances,
credit agency Moody's last week cut its ratings on South African
government bonds by one notch, citing the deterioration in the
government's debt profile and uncertain revenue prospects.
($1 = 8.3194 South African rand)
(Reporting by Tiisetso Motsoeneng; Editing by David Dolan)