National Treasury

2003 Budget Vote Presentation

Strategic focus & objectives• Promote economic development, good

governance, social progress & rising living standards

• Advance economic growth & income redistribution

• Ensure accountable, economic, efficient & sustainable management of public finances

• Advocate & enforce transparency in the use of public resources

Strategic focus & objectives• Support sound budgeting & financial

management and the equitable division of resources between the three spheres of government

• Ensure that tax policy is fair & well formulated so that Government is able to raise revenue efficiently & equitably

• Manage Government’s financial assets & liabilities efficiently

Achievements – 2002/03• Firm foundation for growth & development

– Resilient economic performance – Robust fiscal framework– Sound & efficient tax policy design – tax relief &

tax-driven stimulation measures– Declining debt service costs

• Enhanced budgeting & financial management– Measurable objectives & output targets in 2003 ENE – Publication of 3-year strategic plans– 2003 Intergovernmental Fiscal Review – reviews spending

& service delivery at the provincial & local level – Stronger relationship with provincial &

local government

Achievements – 2002/03• Efficient debt management

– Improved international credit ratings– Broadening of international investor base– Restructuring & consolidation of domestic debt portfolio – Diversified funding instruments & improved liquidity

• Improved PFMA implementation– Monthly & quarterly monitoring & reporting– Steady progress in decentralised financial management

• Enhanced international & regional engagement– Nepad & regional policy reform– Extensive interaction with multilaterals – Implementation of the new SACU agreement

Strategic priorities 2003 – 2006• Promoting sustainable growth & development• Strengthening initiatives to reduce poverty & increase

job creation• Enhancing budget transparency & planning• Improving financial management & quality of spending• Advancing procurement reform processes• Reinforcing the quality of financial accounting &

reporting in line with GRAP• Ensuring efficient Government debt & financial asset

management • Deepening relations with international multilaterals

on international financial policy development

Sustainable growth & development• Over the next 3 years:

– Formulating growth-enhancing macro policies that contribute towards investment & job creation

– Maintaining a sound, but more expansionary fiscal stance

– Supporting step-up in national, provincial & municipal infrastructure investment – PPPs

– Gradually liberalising exchange controls– Ongoing tax policy reform incl. retirement tax

reform & joint exchange control & tax amnesty

Poverty reduction & job creation• Over the next 3 years:

– Expanding sectoral policy capacity & monitoring service delivery progress

– Increasing resources to provincial & local government to extend coverage & improve quality of basic & social services

– Reviewing the provincial & local equitable share formulae – 2001 Census demographic data

– Strengthening provincial & local government planning, budgeting, financial management & delivery capacity

Budget transparency & planning• Over the next 3 years:

– Increasing political oversight of budget process

– Enhancing measurable objectives, service

delivery information & output targets

– Strengthening link between strategic planning,

3-year budgeting & reporting at national & provincial

– Extending reporting requirements on conditional

grants under Division of Revenue Act to

non-financial, service delivery information

Financial management & accountability• Over the next 3 years:

– Implementing PFMA at national & provincial level and MFMA at local level

– Extending municipal financial management reforms– Providing & managing systems for monitoring &

managing expenditure– Monitoring & reporting on PFMA implementation– Roll-out of financial-management training– Completing financial management systems (BAS)

implementation – Developing integrated financial management system

master plan

Procurement reform processes• Over the next 3 years:

– Phasing in implementation of supply chain management practices

– Delegating procurement authority from state tender boards to departmental procurement units

– Repealing national & provincial state tender board legislation & closure of offices

– Regulating & monitoring supply chain management practices

– Managing transversal contracts on behalf of Government

Financial accounting & reporting• Over the next 3 years:

– Phasing in implementation of GRAP & migration from cash to accrual accounting – 85% of approved policies implemented by March 2006

– Finalisation of accounting policies & practices in line with GRAP – 6 critical policies finalised and circulated by July 2003 for implementation

– Implementing uniform annual financial statements & reporting requirements

– Facilitating implementation of internal audit framework, policies & practices

Liability & asset management• Over the next 3 years:

– Continuing to focus on debt cost reduction– Continuing diversification of funding instruments– Completing development of full-yield curve of inflation

linked bonds – Broadening investor base in government bonds– Pursuing international credit rating upgrades– Eliminating the Net Open Forward Position– Improving cash management practices– Reviewing & implementing risk management framework– Undertaking corporate governance review of state owned

enterprises

International financial engagement• Over the next 3 years:

– Strengthening relations with international multilaterals – IMF, World Bank, African Development Bank, G20, G24 – on international financial policy development

– Boosting efforts on Nepad capital flows initiative & ongoing reform of SADC institutions

– Strengthening Common Monetary Area– Completing the establishment of Financial Intelligence

Centre in line with Financial Intelligence Centre Act

Organisational restructuringAchievements in 2002/03

• Treasury restructuring in line with Resolution 7 – public sector transformation & restructuring

• 8 divisions employ 500 professional & admin staff – increasing to 750 by 2005

• New organisational structure developed & senior management & key professional positions filled

• Refurbishment & renovation of accommodation – 40 Church Square & 240 Vermeulen Str.

Compliance with PFMA• Unqualified audits ( 3rd year running)

• CFO appointed

• Internal audit outsourced

• Risk management assessment completed & risk management committee established

• Fraud prevention plan developed

• Audit Committee established• Piloting of procurement reforms

Effective organisational development• Enhancing HR policies and systems – incl.

performance management system & ETD

• Redesigning IT infrastructure

• Continuous improvement of financial manual

• Consolidating parliamentary services

• Enhancing Office of the DG (COO)

• Continuing implementation of affirmative action & employment equity practices

57%

43%

BLACK

WHITE

53%

47%

BLACK

WHITE

41%

59%

MALE

FEMALE

73%

27%

MALE

FEMALE

Staff Profile as at 31 March 2003

Management Employees below Management

GENDER GENDER

RACE RACE

Estimates of Expenditure Operational Budget Programme VOTED BUDGET Increase/

2002/03 2003/04 Decrease

R’000 R’000 %

1. Administration 118 405 102 382 -14

2. Economic planning & budget

management 124 354 122 593 -1

3. Asset & Liability Management 31 613 42 831 35

4. Financial management and systems 313 584 357 716 14

5. Financial accounting and reporting 56 195 63 208 12

TOTAL OPERATIONAL BUDGET 644 151 688 730 7

VOTED BUDGET Increase/

2002/03 2003/04 Decrease

R’000 R’000 %

Operational budget 644 151 688 730 7

6. Provincial & local government

transfers 2 480 000 3 061 403 23

7. Civil and Military Pensions,

Contributions to Funds and Other

benefits 1 915 635 2 029 569 6

8. Fiscal transfers 5 316 868 5 992 605 13

TOTAL BUDGET 10 356 654 11 772 307 14

Estimates of Expenditure Transfers

Programme 8 2003/04 2004/05 2005/06

R’000 R’000 R’000

International transfersLesotho and Namibia 157 632 167 044 177 767Contribution to HIPC initiative 55 000 55 000 African Development Bank contributions 129 567 154 316 163 575

SA Revenue Service 3 792 007 4 602 509 4 748 312

Development Bank of Southern Africa 40 001 40 001 40 001

Financial and Fiscal Commission 12 679 13 759 13 875

Secret Services – NIA, SASS and SAPS 1 768 718 2 055 239 1 979 940

Financial Intelligence Centre 37 000 12 720 13 483

Other 1 1 1

TOTAL FISCAL TRANSFERS 5 992 605 7 100 589 7 136 954

Fiscal transfers