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 State’s financial assets and liabilities Promote accountability through financial reporting, systems and controls

4. National Treasury - structure Director-General Maria Ramos Budget Office Intergovernmen- tal Relations Accountant- General Andrew DonaldsonIsmail MomoniatIsmail Mamoojee Public Finance Economic Policy & International Relations Asset & Liabi- lity Management Andrew DonaldsonLesetja KganyagoBrian Molefe Specialist Functions Corporate Services Coen KrugerSimone le Hane PIC Ncedo Mlamla Pensions Frans le Roux

5. International and domestic relations National Treasury SA Reserve Bank SA Revenue Service Development Bank of SA Budget Council FOSAD clusters Financial Services Board International Monetary Fund World Bank African Development Bank G20 forum National Departments Provincial Treasuries

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 voted: operational budget & transfers

12. Estimate of Expenditure Operational budget VOTED BUDGET Increase/ Programmes 2000/2001 2001/2002 (Decrease) R’000 R’000 % 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. VOTED BUDGET Increase/ Programmes 2000/2001 2001/2002 (Decrease) R’000 R’000 % 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 Audit13 699 7 593 (80) Investment of public moneys 1 1 0 Total 8 691 698 8 679 567 (0.14) Estimate of Expenditure (Transfers and related )

14. Estimate of Expenditure VOTED BUDGET Increase/ STANDARD ITEMS 2000/2001 2001/2002 (Decrease) R’000 R’000 % 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)