Bhisho warned: cut costs or face a massive deficit

THE Eastern Cape’s finances are in a dire state and if cost-cutting measures are not put in place now, the province could be R1.8-billion in the red by the end of the financial year, the provincial Treasury has warned.

Finance MEC Phumulo Masualle said the matter had been reported to the executive council (Exco) for a decision on how to remedy the situation.

The province had already cut the budget by 10% at the beginning of the financial year. And it will have to be slashed by a further 5% next month when the budgets are adjusted.

Masualle said the main offenders were the departments of Health and Education, which had received R15.1-billion and R26.2-billion respectively.

When the provincial Treasury assessed spending patterns recently, it projected that the province would have overspent by more than R1.8-billion by the end of the financial year. It found that: ý The Health Department alone would overspend its budget by R1.3-billion, largely on personnel posts which were not budgeted for;

ý The Treasury had to source R450-million for an out-of-court settlement in which the Education Department agreed to fill all vacant teaching posts even though this had not been budgeted for; and

ý More than 54 000 Eastern Cape pupils might be forced to walk to school in November as an extra R130-million was needed to finance the transport programme until the end of the financial year.

“We are saying if certain things do not happen in Health, these are the projections,” Masualle said.

“We don’t have a right to borrow money. An overdraft is also illegal. So it’s a projected amount which we have to avoid.”

The executive council has now resolved that Treasury must go ahead with belt-tightening mea- sures across all departments.

Each department will have to cut its telephone bills, travelling costs, government vehicle usage, conferencing and catering.

“We have government officials who are travelling to meetings which could have been convened over the phone,” Masualle said.

He said some of the major decisions were made right at the beginning of the financial year, as the provincial Treasury prepared budget allocations.

“When we tabled the budget, Exco took a decision that we were going to revise downwards department budgets by a whopping 15%.

“Ten percent of it was immediately effective when we tabled [the budget], 5% of it is going to be derived when we table the adjustments,” Masualle said.

DA leader Bobby Stevenson said: “What we need in this province is financial discipline – that when budgets are introduced, we stick to the budget.”