‘Government must ensure critical services are protected’

Mindful of recession, Bhisho to disburse budget of R86.9bn in 2020/2021

Despite SA’s decline into a recession and the knock-on effect on the fiscus, government must ensure that critical services are protected.

That was the message from Eastern Cape finance MEC Mlungisi Mvoko in the provincial budget speech he delivered in the legislature in Bhisho on Thursday.

The provincial government will disburse a budget of R86.9bn in 2020/2021, out of a total of R266.8bn to be spent over the medium term expenditure framework (MTEF).

Stats SA this week confirmed that two quarters of consecutive contraction of the economy in 2019 had ensured the country was firmly in the grip of recession.

But Mvoko said government had a responsibility to protect critical services.

While budget cuts were unavoidable, the MEC said careful steps were taken during the budget process “to protect most non-negotiables in departmental allocations”.

These measures included reprioritising and allocating financial resources to protect critical services.

The new provincial budget was premised on:

● Increased investment in projects that will grow the economy;

● Improving fiscal discipline and governance;

● Protecting and growing critical socio-economic infrastructure; and

● Keeping public expenditure at sustainable levels.

A provincial economic recovery plan would seek innovative, inclusive growth through enabling infrastructure and high value agriculture, focusing on human development, environmental sustainability and capable democratic institutions.

Mvoko said the provincial government had identified up to R7.6bn in additional own revenue generation for the province, of which R6.1bn would come from market-related rentals on governmentowned properties via the department of public works.

The National Treasury’s budget facility infrastructure fund for mega projects with a minimum value of R3bn over three years was a good opportunity for government departments and municipalities to augment shrinking provincial fiscus allocations.

Government was also implementing zero-based budgeting, rather than continuing to use the historical incremental budgeting process.

In the education and health departments which, together, account for 75% of provincial government spending, this approach would determine true departmental expenditure baselines, while also ensuring government received value for money — a key requirement of the Public Finance Management Act (PFMA).

Work would also be finalised on the two departments’ accruals and payables.

“To delay action on accruals and payables provides the greatest fiscal risk for the province,” he said.

The MEC said government must urgently execute the longstanding report of the Government Technical Advisory Centre (GTAC), on the maximisation and efficiencies of public entities, to assess whether they played an important part in restructuring and strengthening of the economy.