It is “vitally important” to acknowledge that provincial underspending of capital budgets among provinces had been on a declining trend over the past three years, Finance Minister Trevor Manuel said on Thursday.
He was responding to African National Congress member of the National Council of Provinces, Kgoshi Mathupa Mokoena, who asked whether he or his department would take corrective measures against provinces that were unable to utilise their allocation “within a financial year”.
Three years ago ‒- in 2002 and 2003 — provinces underspent their capital budgets by R1,1-billion, noted the minister.
“In 2005/06 total underspending of the capital budget amounted to R938,3-million or some 6% of even larger capital budgets. This is a remarkable improvement, and it needs to be noticed and applauded.”
“For if we fail to acknowledge it we shall inadvertently destroy the morale of those who have contributed to bringing about the change. Simultaneously, we must continue to use the quarterly reports to monitor spending patterns during the course of the financial year,” said Manuel.
He noted that there were mechanisms to deal with underspending.
Among them was alerting Parliament and the provinces both through the Budget Council and the President’s Coordinating Council when underspending was anticipated — not after it had occurred. A second method was instituting a process of stopping transfer of the provincial infrastructure allocation to provinces that were anticipated to underspend their infrastructure allocation.
“In the 2005/06 financial year R746-million of the provincial infrastructure grant was stopped to five provinces. In that year provinces underspent their capital budgets by R938-million.
“Implementing such a decision was tough, not only because it was based on projections, but because, invariably, the places that are unable to spend allocations are sometimes those that need the resources most,” said Manuel.
Another method was facilitating reallocation of funds that have been halted to departments that were demonstrating capacity to spend their allocations, first within the same province and thereafter between provinces.
Manuel said that through the infrastructure delivery improvement programme “we are assisting provinces with the delivery of infrastructure”.
“This entails deploying persons with the requisite skills to departments that need support. We started the programme in education and [are] extending it to health and public works.” ‒ I-Net Bridge