National Treasury

1
National Treasury

• Presentation to Portfolio Committee on Finance -
  8 May 2001

2
Aim

• The National Treasury aims to promote economic
  development, good governance, social progress and
  rising living standards through accountability,
  economy, efficiency, equity and sustainability in
  the public finances

3
Key objectives

• Advance economic growth, employment and income
  redistribution
• Sound and sustainable national budget and
  equitable division of resources
• Raise revenue required equitably and efficiently
• Sound management of States financial assets and
  liabilities
• Promote accountability through financial
  reporting, systems and controls

4
National Treasury - structure
Director-General
PIC
Pensions
Maria Ramos
Ncedo Mlamla
Frans le Roux
Budget Office
Intergovernmen- tal Relations
Accountant- General
Andrew Donaldson
Ismail Momoniat
Ismail Mamoojee
Public Finance
Economic Policy International Relations
Asset Liabi- lity Management
Andrew Donaldson
Lesetja Kganyago
Brian Molefe
Specialist Functions
Corporate Services
Coen Kruger
Simone le Hane
5
International and domestic relations
SA Revenue Service
Development Bank of SA
SA Reserve Bank
Financial Services Board
FOSAD clusters
Budget Council
National Treasury
National Departments
Provincial Treasuries
International Monetary Fund
G20 forum
African Development Bank
World Bank
6
Strategic overview policy objectives

• Economic policy and financial oversight
• Growth-oriented fiscal stance
• Sound financial regulation consumer protection
• Budget reform
• Strengthened MTEF process
• Improved intergovernmental cooperation
• Establishment of PPP Unit
• Tax policy and revenue management
• Broadening of tax base
• Tax system modernisation and law reform

7
Strategic overview (cont.)

• Debt management aimed at reducing debt service
  costs in long-term
• Asset management
• coordination of public enterprise borrowing
• contribution to state asset restructuring process
• broader oversight of cash management
• Strengthened international relations
• participation in financial reform initiatives
• international debt reduction
• African and regional economic development

8
Strategic overview (cont.)

• PFMA implementation
• legislative amendments revision of regulations
• modernisation of reporting, accountability
  controls
• Financial management reforms
• Overhaul of government procurement processes
• Acquisition of new financial systems
• Establishment of Accounting Standards Board
• Support monitoring of internal audit
• Development of accounting policies
• Consolidation of financial statements

9
Key publications

• Budget Review
• Estimates of National Expenditure
• Intergovernmental Fiscal Review
• Medium Term Budget Policy Statement
• Guidelines
• Guide for Accounting Officers
• Treasury Guidelines for budget submissions
• Public-Private Partnership Guidelines

10
Vote 7
11
Amounts to be votedoperational budget
transfers
12
Estimate of ExpenditureOperational budget
VOTED BUDGET
Increase/ Programmes 2000/2001 2001/2002
(Decrease) R000
R000 1. Administration
90 901 68 398
(33) 2. Expenditure planning
and budget management 73 149
75 009 2 3. Asset and
liability management 17 539
17 908 2 4. Procurement
management and financial systems
243 736 311 483
22 5. Financial accounting and reporting 115
513 18 811
(514) 10. Auxiliary and associated service
5 230 5 321 2 Total
operational budget 546 068 496 930
(9)
13
Estimate of Expenditure(Transfers and related)
VOTED BUDGET
Increase/ Programmes 2000/2001
2001/2002 (Decrease)
R000 R000 6.
Fiscal transfers 2 761 226
3 008 694 8 7. Civil
pensions and contributions to funds
1 432 712 1 576 709
9 8. Military pensions and other benefits
137 018 145 386 6 9.
Provincial and local government
transfers 3 457 000 2 957 877
(17) 10. Auxiliary and associated
services Secret services 890 042
983 307 9 Audit 13
699 7 593
(80) Investment of public moneys 1
1 0 Total
8 691 698 8 679 567 (0.14)
14
Estimate of Expenditure
VOTED BUDGET
Increase/ STANDARD ITEMS 2000/2001
2001/2002 (Decrease)
R000 R000
Personnel expenditure
114 015 118 307
4 Administrative expenditure
28 751 31 723
9 Inventories 7 125
8 500 16 Equipment
37
178 12 801
(190) Professional and special services
269 518 342 559
21 Transfer payments
7 353 202 7 092 390
(4) Miscellaneous
1 427 977 1 570 217
9 TOTAL 9 237 766
9 176 497 (1)
15
National Treasury - employment
16
Restructuring of National Treasury

• Strategic plan
• Structure to be finalised
• Staff consultation
• Absorption framework
• Employment Equity
• Employee Assistance Programme
• Education Training Development

17
Programme structure

• 1 Administration
• 2 Economic planning budget management
• 3 Asset liability management
• 4 Procurement management
• 5 Financial systems reporting

• 6 Fiscal transfers
• 7 Civil pensions contributions to funds
• 8 Military pensions other benefits
• 9 Provincial local government transfers
• 10 Auxiliary associated services

18
Administration (programme 1)
19
Corporate service functions

• Communication
• Branding of National Treasury
• Annual Report and Website
• Focus on external stakeholders
• Refocus on internal communication - ethos of
  National Treasury
• Information technology
• Call centre and infrastructure

20
Corporate services (cont.)

• Financial management
• Implementation of PFMA
• Procurement reform
• Audit Committee appointed
• Internal Audit unit outsourced
• Legal services
• Legal advice drafting management of litigation

21
Economic planning budget management (programme
2)
22
Economic planning budget management - policy
priorities

• Budget reform service delivery information
• Promotion of growth, employment redistribution
  through sound public policies
• Financial regulatory reforms stability,
  efficient markets, consumer protection
• Strengthening infrastructure investment
• Promotion of sound public-private partnerships

23
Economic policy budget management (cont.)

• Equitable allocations to provinces local
  government
• Improved intergovernmental financial arrangements
• Sound management of international development
  cooperation
• Promotion of international regional financial
  cooperation

24
Economic policy budget management - outputs

• Macroeconomic international financial policy
  advice
• Financial policy regulatory advice
• Tax policy
• Sectoral departmental policy advice
• Budget framework division of revenue
• Budget documentation
• PPP agreements
• International cooperation agreements
• Framework for provincial local grants

25
Asset liability management (programme 3)
26
Asset liability management - priorities

• Meet annual borrowing requirement
• Manage foreign and domestic debt portfolios
• Restructuring and financial management of state
  assets
• Sound cash management

27
Asset liability management - objectives
outputs

• Liability management
• financing at favourable terms
• contribute to development of the bond market
• broaden and improve the international investor
  base
• minimise long-term debt cost, subject to
  acceptable risk
• efficient operational support

28
Asset liability management - objectives
outputs

• Asset management
• advise on restructuring of state assets
• promote principles of sound corporate governance
• manage risk exposure of Government arising from
  public enterprise borrowing activities
• resolve financial problems in SOEs
• improve government cash management

29
Procurement management, systems reporting
(programmes 4 5)
30
Procurement management, systems and reporting -
priorities outputs

• Procurement moveable asset managemnt
• Phase out State Tender Board
• Preferential procurement regulations
• Procurement reform implementation
• Monitor support PFMA implementation
• Financial systems
• Maintain, support enhance systems
• Identification of integrated financial systems to
  support new accounting requirements

31
Procurement management, systems and reporting -
outputs (cont.)

• Financial reporting
• Monthly reporting (PFMA sect 32)
• Monthly annual consolidated statements
• Introduction of new format financial statements
• Establish Accounting Standards Board
• Define generally recognised accounting practice
• Administration of NRF and RDP Fund
• Improve departmental banking services
• further extend electronic funds transfer

32
Procurement management, systems and reporting -
outputs (cont.)

• Financial management
• Establish internal audit in national provincial
  departments
• Financial management performance measurement
  system
• Implement management information system
• Training and skills development
• On the job training programmes for financial
  staff
• Assistance to IPFA

33
Fiscal transfers (programme 6)
34
Fiscal transfers - key outputs

• SA Revenue Service
• Establish 6 processing centres by 2002
• Ongoing efficiency improvements
• Internal restructuring (Siyakha)
• Campaign against tax fraud
• FFC advice recommendations
• CMA payments to Lesotho and Namibia
• Contributions to international debt relief and
  ADB Development Fund

35
International strategic themes

• Regional integration
• monetary fiscal coordination in SADC and SACU
• Understanding promotion of capital flows
• Securing finance for development projects in
  Africa
• Supporting HIPC debt relief
• Promoting interests of developing countries in
  international trade

36
Civil and military pensions and other
contributions (programmes 7 8)
37
Civil and military pensions contributions to
funds

• Outputs are payments in accordance with relevant
  legislation agreements
• Contributions to post-retirement medical benefits
  main expenditure item
• Policy developments
• Improved operational competencies
• Client service improvement plan
• PFMA implementation and GAAP compliance
• Improved management of contributions membership

38
Provincial and local government transfers
(programme 9)
39
Provincial grants - policy developments outputs

• Provincial supplementary grants
• Promotion of compliance with PFMA
• Realistic and credible budgets
• Pilots for hospital management reform
• Consolidation of financial management planning
  grants
• Infrastructure grants
• Flood reconstruction
• Rehabilitation of roads, schools, clinics, rural
  infrastructure

40
Local government grants - policy and outputs

• Restructuring grant
• Modernisation and restructuring of large
  municipalities
• Credible and sustainable budgets
• Financial management grant
• Three-year budgeting in local sphere
• GAMAP new accounting standards
• Financial management reforms
• Division to approved pilots roll-out plan

41
Auxiliary and associated services (programme 10)
42
Auxiliary and associated services - process
outputs

• Financial transfers to SASS, NIA SAPS
• Transfer payments in line with approved budgets
• Accountability rests with agency heads
• Service charges provides for bank charges
• Audit provides for shortfalls of statutory bodies
  municipalities in respect of Auditor-General
  charges

43
Public Investment Commissioners - Budget
44
Key objectives of the PIC

• Upgrading professional asset management capacity
• Integration of national economic priorities more
  fully into investment profile
• Review of restructuring / integration with GEPF
• Compliance with Employment Equity Bill

45
Investment profile 31 March 2000 (at book value)
46
Conclusion Main changes to baseline

• Increase in SARS allocations
• Provision for Financial Intelligence Centre
• Increases in local government grants
• Merging of smaller provincial capacity-building
  grants into supplementary grants
• Adjustment to Secret Service allocations
• Termination of allocation for computer service
  (SITA)

47