NATIONAL TREASURY BRIEFING TO THE STANDING COMMITTEE ON FINANCE:

NATIONAL TREASURY BRIEFING TO THE STANDING COMMITTEE ON FINANCE: • RESPONSES TO THE BRR REPORT • 2015/16 QUARTER 4 REPORT Presenter: Lungisa Fuzile | Director-General, National Treasury | 17 May 2016

Mandate of the Treasury • Support economic growth and development, good governance, social progress and rising living standards through the accountable, economical, efficient, equitable and sustainable management of public finances, maintenance of macroeconomic and financial sector stability, and effective financial regulation of the economy. • The department is mandated by law to : • promote national government’s fiscal policy and the coordination of its macroeconomic policy • ensure the stability and soundness of the financial system and financial services • coordinate intergovernmental financial and fiscal relations • manage the budget preparation process • enforce transparency and effective management in respect of revenue and expenditure, assets and liabilities, public entities, and constitutional institutions.

Alignment to NDP / MTSF goal

RESPONSE TO THE BRR REPORT Recommendations on BRR report • National Treasury responded to the recommendations as per the BRR report as printed in ATC no 136. • Responses are submitted as Annexure A

Quarter 4 targets performance status Summarised Quarter 4 service delivery targets performance

Quarter 4 targets performance status Summarised Quarter 4 service delivery targets performance The detailed annual progress report as at the 31 March 2016 is submitted as an annexure.

NATIONAL TREASURY FINANCIAL PERFORMANCE AS AT 31/03/2016

Performance per programme

Outcome per economic classification 21

Significant variances and reasons (1/2) • The main items excluding the statutory amounts making up the overall positive variance of R314.243 million are Transfers (R248.789 million) and Operational Expenditure (R 65.723 million), as follows: • R225 million for Employment Creation Facilitation Fund (ECFF) transfer payments which was scheduled for payment in March 2016, however, the funds could not be disbursed as the Jobs Fund Partners have not met the disbursement conditions which includes the job targets, due to the effect of change in environmental conditions that affected the in the 2015/16 financial year. Consequently, R60 million of the above funds has been requested as rollover to the 2016/17 financial year and the remaining R165 million was declared to National Revenue Fund (NRF). • R22.1 million on ECFF operational budget as there were delays in Government Technical Advisory Centre (GTAC) recovering expenses from the ECFF. The funds will be declared to NRF. • R23.4 million unspent funds due to a number of municipalities transfer payments which were withheld due to the non-compliance with the Division of Revenue Act (DoRA) (Act no 1 of 2005 Gazette no39746 dated 26 February 2016)and the Neighborhood Development Partnership Grant (NDPG framework). • R12.5 million surpluses on NDPG (Indirect Grant). The funds were initially transferred to GTAC but returned later in March 2016 due to delays in the appointment of service providers in municipalities for the new collaborative Urban network precinct planning process. 22

Significant variances and reasons (2/2) • R7.5 million unspent funds mainly for the procurement of 4 servers system which was requested as part of the rollover to the 2016/17 financial year. • R3.5 million unspent funds mainly for the rollout of the Municipal Regulation on a Standard Chart of Accounts (mSCoA) project which was requested as part of the rollover to the 2016/17 financial year. • R20.2 million cumulative saving due to cost saving measures on items such as travel, training and stationery and consultancy services etc.

Statutory Amounts : Debt Service Cost The Debts Service Costs reflect an amount of R 907.883 million as at end of 31 March 2016 higher than projected. The main reasons for the over payment are as follows: • higher interest on Bonds than expected due to the impact of the switch transactions in bonds on the interest received set against interest paid. • higher interest on Treasury bills than expected due to change in the repo rate from 6.75% to 7%.

Questions and Answers Thank You

NATIONAL TREASURY BRIEFING TO THE STANDING COMMITTEE ON FINANCE: