The Road Accident Fund (RAF) has received a cash injection of R1,3-billion from the National Treasury to help ease liquidity constraints, its chief executive officer said on Wednesday.
Jacob Modise said in a statement the money was part of the assistance package that would be announced by the finance minister in his medium-term budget policy statement to Parliament next Tuesday.
The RAF provides financial assistance to people hurt in accidents on the country’s roads and is funded by a levy on fuel.
”The last few months have been particularly challenging, with the RAF having to take the difficult decision to significantly slow down the processing of claims due to limited available cash.”
On average, the RAF received R700-million a month in fuel levy, but processed claims amounting to approximately R1-billion.
In the 2008 financial year, the RAF’s fuel levy income amounted to R8,2-billion and claims expenditure totalled R15,5-billion. Only R9-billion of the claims expenditure was paid in cash. The balance added to the increasing liability for outstanding claims, which at year end, stood at R30,3-billion.
The total liabilities of the RAF, on March 31 2008, exceeded its assets by R27,8-billion.
Modise said the fund was constantly ”harassed” by lawyers who issued writs and attachment orders.
”We have been subjected to enormous harassment from the legal profession with attorneys issuing writs … and generally intent on disrupting the business of RAF.”
Modise said RAF has developed a revenue requirement model to help address its ”continuous cash-flow shortages”. — Sapa