Standing Committee on Finance Annual Budget Process 02 July 2014 Esther Mohube

Structure of the presentation Annual Budget Process What is a budget? Legal Framework Role Players in Budget Cycle Budget Cycle Where are we now? Documents for budget oversight

Annual Budget Process Purpose of the presentation is to give a broad overview of the annual budget process A budget is: A planning tool that translates policy into service delivery through the allocation of scarce resources. The process of how revenue raised by national government will be allocated to national, provincial & local governments. The budget is a process through which choices have to be made about competing priorities. The budget can potentially act as a powerful tool for redistribution & development in society & can enhance the stability of the country’s economy.

Legal Framework SA legal fiscal oversight framework comprises of the Constitution, PFMA, MFMA & the Money Bills Act Constitution Mandates Parliament or legislative organs of state to scrutinise & oversee Executive actions to ensure accountability Oversight mandate: Sections 55, 92 , 114 & 133 Oversight processes: Sections 213, 214 & 215 Public Finance Management Act (PFMA) Passed to regulate the financial management of both the national and provincial spheres of government Objective is to ensure transparency, accountability & sound management of the revenue, expenditure, assets & liabilities of all public institutions. Section 27 (1): The Minister must table the annual budget for a financial year in the NA before the start of the financial year Section 27 (4): AO of each dpt. must submit to Parliament measurable objectives for each main programme in the department’s Budget Vote Municipal Finance Management Act (MFMA) Regulates local government finances Objective is to ensure sound & sustainable management of the financial affairs of the local government sphere.

Legal framework (cont.) The Money Bills Amendment Procedure & Related Matters Act Provides for a procedure to amend money bills before parliament Prior to 2009, Parliament could not amend Money Bills Act was enacted in 2009 to give effect to the Constitution Section 77 (3) of the Constitution…..“An Act of Parliament must provide for a procedure to amend money Bills before Parliament”. Sections 4 & 15 of the Act provides for establishment of Finance & appropriations committees & the PBO, respectively Committees on Finance must consider & report on: Macro-economic and fiscal policy Fiscal framework and revenue proposals Reports on actual revenue published by NT Section 10 (c) states that “the relevant members of Cabinet must table updated strategic plans for each department, public entity or institution, which must be referred to the relevant committee for consideration and report “.

Role players in the budget cycle Portfolio Committees, Finance and Appropriations Committees, SCOPA National and Provincial Departments National Treasury Auditor-General Public Entities Constitutional entities Financial and Fiscal Commission Civil Society Parliamentary Budget Office

Budget cycle and milestones December to February SONA National Budget Budget Review ENE Fiscal Framework March to August Division of revenue Bill Appropriation Bill Updated SPs, APPs, Budget Votes Mid-year continuous monitoring Section 32 reports, Quarterly Expenditure and Performance Reports September to November BRRR Reports MTBPS Annual Reports

Budget Cycle (cont.) SA uses a three-year rolling budget, the MTEF system that is informed by key government priorities, strategic plans of departments & the fiscal stance. January, Cabinet Lekgotla discusses the government priorities for the next financial year February, the President presents the SONA, the Minister of Finance introduces the National Budget. March & June, Parliament passes the Division of Revenue Bill & Appropriation Bill. These bills confirm the allocation of funds to each vote. September to November, the NA submits BRRR reports, adopts the fiscal framework & passes money bills. BRRR provides an assessment of the department’s service delivery performance given available resources. MTBPS sets out the budget policy framework for the next 3 years

Where are we now ?? As the peoples’ representative, Parliament: Approves or amends the budget. Ensures budget matches the nation’s needs with the resources available. SCoF passed the fiscal framework in March 2014, The Appropriation Bill is currently before the SCoA Now, the relevant Member of Cabinet must table the updated strategic plans for each department & public entity. Budget Votes, SPs & APPs of NT, SARS and StatsSA will be tabled before the SCoF These will then be referred to the Committee for consideration & reporting. Portfolio committees exercise oversight of service delivery performance of departments & entities Committee should process these Budget Votes & report by 11 July 2014.

Documents for budget oversight Key Government policy documents that are relevant: State of the Nation Address Sector relevant documents National Budget documents Division of Revenue Act of 2014 Budget Review Estimates of National Expenditure (ENE) Appropriation Bill Minister’s speeches and presentations to committees Updated Strategic Plans Annual Performance Plans Auditor General and SCOPA reports Reports of other relevant institutions (FFC, DPME)

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