NATIONAL TREASURY 4 th QUARTER PERFORMANCE FOR 2009/10

1. NATIONAL TREASURY 4th QUARTER PERFORMANCE FOR 2009/10 STANDING COMMITTEE ON APROPRIATIONS Presenter: Lesetja Kganyago | Director-General | 24 August 2010

2. CONTENT • 2009/10 Expenditure Outcome • Budget versus Expenditure per Economic Classification • Programme Budget versus Expenditure • Asset & Liability Management • Financial Management & Systems • Provincial and Local Government Transfers: NDPG • Fiscal Transfers: FIC • Way- Forward

3. 2009/10 NT EXPENDITURE OUTCOME • The final appropriation for the National Treasury for the 2009/10 financial year was R62.8 billion. This excludes statutory amounts. • Of the R62.8 billion appropriated: - R1.3 billion for the operational budget (Programme 1 -6); and - R61.5 billion for the transfer budget (Programme 7-9). • Actual total expenditure amounted to R62.7 billion (i.e. 99.7% of allocated funds); - R1.2 billion for Programme 1-6; and - R61.5 billion for Programme 7-9. • The under expenditure amounted to R176.8 million, which is 0.3% of the total appropriated funds.

4. NT BUDGET VERSUS EXPENDITURE PER ECONOMIC CLASSIFICATION

5. PROGRAMME BUDGET VERSUS EXPENDITURE

6. ASSET AND LIABILITY MANAGEMENT (ALM) Programme 3 (Asset & Liability Management) • The under expenditure of R7.8 million is mainly due to lower spending on the Capital Structure and Financial Distribution Policy project, delays in the development of the treasury management system; lower spending on operational expenditure mainly training & development, travel and subsistence costs as a result of cost-savings measures and vacancies.

7. ALM ESTABLISHMENT AS AT 31 MARCH 2010

8. ALM UNDERSPENDING ON GOODS AND SERVICES

9. FINANCIAL MANAGEMENT & SYSTEMS Programme 4 (Financial Management & Systems) • The under expenditure of R53.8 million is mainly due to less than anticipated spending on the IFMS project and transversal systems, lower expenditure on operations (mainly training and development), venues and facilities and on vacancies. • The IFMS project implemented asset management modules to the leading sites viz. National Treasury and Limpopo Provincial Treasury. • Capacity problems and challenges within the Dept of Defence in terms of asset management resulted in lower spending. • The delay in due diligence and protracted contractual negotiations pertaining to the HR COTS and procurement management modules, resulted in lead sites’ preparations commencing late.

10. FINANCIAL MANAGEMENT & SYSTEMS (CONTINUED)

11. FINANCIAL MANAGEMENT & SYSTEMS (CONTINUED)

12. PROVINCIAL & LOCAL GOVERNMENT TRANSFERS (NDPG) Programme 7 (Provincial & Local Government Transfers) • The under expenditure of R83.3 million is mainly due to lower spending by the municipalities for the Neighbourhood Development Partnership Grant (NDPG). • Slower spending by municipalities than projected in the milestone payment schedules. This is attributed to: • Staff turnover rates in municipalities compromising Executive buy-in for the grant programme • Delays and irregularities in tender processes • Estimate that a third of NDPG-recipient municipalities need intensive support & monitoring to sustain and ensure quality outputs • Difficulty of accurate cash-flow forecasting for large, multi-stakeholder programmes • NT insistence on municipalities meeting conditions and objectives of the Grant (e.g. submission of business plans, establishing leverage, Operations & Maintenance plans, etc.) as per DoRA • Municipal capacity (budgeting, planning, financial management)

13. Programme 7: Neighbourhood Devlopment Partnership Grant (NDPG) Mandate (DoRA) “To support neighbourhood development projects that provide community infrastructure & create the platform for other public & private sector development, towards improving the quality of life of residents in targeted underserved neighbourhoods (townships generally)” Purpose (DoRA) “A Technical Assistance [TA] Grant aimed at supporting the development of township development plans A Capital Grant aimed at supporting nodal investment into the construction or upgrading of community facilities, which may attract private sector investment” NDPG is ahybrid grant Schedule 6 – direct transfers to municipalities Schedule 7 – indirect transfers to municipalities’ service providers via PDF trading account 57 municipalities were awarded with NDPG grants: NDPG commitment over the medium-long term of R8.8 billion

14. NDPG Achievements

15. 2009/10 EXPENDITURE OUTCOME (NDPG)

16. FISCAL TRANSFERS Programme 9 (Fiscal Transfers) • The under expenditure of R22.4 million is mainly due to less than anticipated transfer payment to the Financial Intelligence Centre (FIC).

17. WAY-FORWARD NT • The Department surrended the unspent funds of R176.8 million for the 2009/10 financial year to the fiscus. • Critical posts are being filled in line with the mandate of the Department. • Performance monitoring mechanisms are in place to track and monitor programme’s spending patterns. • Continue with the cost saving measures within the Department. IFMS • Finalise the roll-out of the asset management module • Finalise the roll-out of procurement module to lead sites • Finalise the roll-out of HR module to lead sites

18. WAY-FORWARD (CONTINUED) ALM • Capital Structure and Financial Distribution Policy project will be completed by end December 2010 NDPG • Central technical assistance procured for direct Awards support and diagnostics • NDP review budget projections based on: • Historical financial information • Secondary data about municipal performance • Qualitative assessments • NDP insisting on transfers based on approved Business Plans demonstrating clear value for money, sustainability, and leverage (no more Quick Wins)