National Treasury accounts to Standing Committee on Appropriations
The National Treasury presented the 2020/21 3rd quarter expenditure before the Standing Committee on Appropriations to account for government expenditure and deliverables, as specified by the Minister of Finance during his tabling and subsequent readjustment of the national budget in 2020, writes Abel Mputing.
On the whole, the preliminary data for the third quarter of 2020/21 shows spending of R730.9 billion, which is lower by R767.1 million or 0.1% against the projected expenditure of R731.6 billion.
The National Treasury’s Senior Economist, Dr Mampho Modise, said goods and services contributed to the largest proportion of the lower than projected underspending by R4.3 billion, compensation of employees by R2 billion, payment for capital assets by R1.9 billion. On the other hand, Dr Modise said the transfer and subsidies, payment for financial assets and interest and rent on land are higher than projected by R3.9 billion, R3.4 billion and R5.7 million, respectively. Dr Modise said Covid-19 expenditure amounted to R24.5 billion at the end of the third quarter.
Dr Modise further added that the National Treasury’s higher than projected spending was mainly attributed to exchange rate fluctuations in the payment for financial assets for South Africa’s sixth capital contribution instalment to the New Development Bank.
In her reportage of the financial performance of public entities, Dr Modise pointed out the difficulty of verifying data, because some are not based on the basic accounting system (BAS). They do not have budget programme structures, as is the case with departments that are approved by the relevant Treasury. “Hence their programmes are not necessarily linked to deliverable objectives. Their spending is only in economic classification terms.”
Most Members of the committee regretted the fact that the Passenger Rail Agency of South Africa (Prasa) only spent R700 million of its R4 billion allocation, particularly as the rail network is experiencing underinvestment and vandalism. The Chief Director of State-Owned Enterprises at National Treasury, Mr Ravesh Rajlal, replied: “Given the current magnitude of vandalism, it’s now no longer a maintenance issue, it’s now part of its capital expenditure.”
The National Treasury’s report also flagged Denel as a concern, especially in meeting its R1.2 billion debt. Mr Rajlal said: “The major concern is that Denel has liquidity problems. It has not progressed in the sale of its non-core assets and has not found equity partnerships to help turn the company around.”
Denel had a turnaround strategy that was approved in 2018 that was meant to turn it into a profitable company. “Why it has not yet been implemented?” asked Mr Xolisile Qayiso, another Member of the committee. “There will be further discussions with the shareholder in February and it will soon table its intent to dispose the non-core assets before the Cabinet. This would bring R3 billion to Denel’s coffers. Debate with our defence force and other strategic clients of Denel will resume to ensure Denel returns to its past glory and is financially viable,” replied Mr Rajlal.