Eastern Cape Province 2007/08 Municipal Budget Process Presentation by: W.H. Nel MEC for Finance (30 May 2007, NCOP Cape Town)

Presentation Outline Purpose Legal Framework Assessments of 2007/08 Budgets Generic Challenges Summary of municipal budgets Proposed Interventions

Purpose The purpose of this report is to update the Select Committee on Finance on the budget process of municipalities

Legal Framework Section 21 (2) (d) (iii) of the MFMA, The Mayor of a Municipality is required to consult the relevant Provincial Treasury, and when requested, the National Treasury in preparing the annual Budget. Section 23 (1) (b) of the Act Also requires that in tabling the annual budget the Municipal Council must consider any views of the National Treasury, the relevant Provincial Treasury, and any Provincial or National organs of State or Municipalities which make submissions on the budget.

Assessments of 2007/08 Budgets Integrated Development Plan The structure and process followed in preparing the IDP MTREF Budget Framework Assumptions made in formulating the budget Format of the MTREF Budget as against the applicable circulars Budget process followed Alignment and compliance Detailed Budget Contents Revenue Operating Expenditure Capital Expenditure

Generic Challenges Non alignment of prioritised projects reflected in the Integrated Development Plans with those funded in the budget. Budgets are not compiled in terms of the requirements of circulars providing guidelines in terms of Format and Content of the budget e.g. MFMA Circular number 28 Budgets were not often supported by attachments and documentation required by section 17 of the Municipal Finance Management Act Some budgets did not reflect the total allocations to the relevant municipality in terms of the Division of Revenue Act IDP’s structure did not comply with IDP framework

Proposed Interventions Provincial Treasury will continue to build capacity for effective monitoring function and for it to take active participation in the budget formulation process Provincial Treasury will promote participation by relevant departments in the formulation of municipal Integrated Development Plans Provincial Treasury will assist to unlock challenges on spending on the Municipal Infrastructure Grant to avoid withholding of funds by transferring departments or loss of grant by our municipalities Provincial Treasury is putting aside R 5million to look at ways in which the financial viability of selected municipalities can be strengthened

Discussion