Already facing falling tax revenues, the government purse is under new pressure from President Jacob Zuma’s creation of new departments and the splitting of departmental functions.
Budget processes are still under way, but billions of rands will be needed to accommodate the new departments of economic development and rural development and the splitting of the education and minerals and energy portfolios.
Government departments are scrambling to get their wish lists together for the coming budget votes in Parliament, when ministers will present the priorities and proposed budgets of their departments.
Starting from scratch, new departments will have to assemble strategic plans and budgets.
The treasury was officially informed of the new structure of government only when President Jacob Zuma announced his new Cabinet. It may need to rejig the budget and a Special Appropriations Bill may be on the cards, requiring Minister of Finance Pravin Gordhan to ask Parliament for approval for additional spending.
”We’re working with the numbers to make sure that when new departments are running or the splitting of departments is effected, the resources they require will be there,” said treasury spokesperson Thoraya Pandy.
Pandy said Treasury officials have been sent to departments to help them draft their budgets.
One indication of the scale of the upheaval in government was last week’s last-minute cancellation of scheduled ministerial briefs.
Government insiders said ministers did not want to face questions about their departments when they were not properly prepared.
”You must remember some of them are not only new to Cabinet, but also new to government,” said a government official involved in the process. ”They have no idea yet how the systems work and could make mistakes if they present these things to the media.”
The budget votes will be the new ministers’ first report-back to the public on what their departments intend doing. They will use the budget allocations approved by Parliament in February this year and negotiate with treasury for additional funds.
Pandy said next year’s budget process is already in the works. The medium-term expenditure framework is due to be presented in October, which will show if the budget is set to go further into deficit.
Departments are under strict treasury instructions to adhere to government’s priorities, cut spending and give South Africans ”value for money”.
”Departments must prioritise service delivery, improving living conditions for the majority of South Africans and offsetting the effects of the global economic crisis,” state treasury guidelines released to departments. ”This requires departments to critically evaluate their current performance against stated targets and ensure that the set outputs are achievable and measurable.”
The guidelines emphasise that the 2010 budget must focus on extracting more value from public spending.
”Spending must become more efficient and lower-priority spending must be reduced. Government’s efficiency savings initiative is intended to redirect funds to high-priority service delivery areas,” they state.
Departments have been warned not to be over-reliant on donor funding. ”Where applicable, departments should indicate where donor commitment to ongoing projects is questionable and report on contingency plans to deal with such an eventuality.”
Rural Development Minister Gugile Nkwinti told the Mail & Guardian that although his department is new, it will have access to the Land
Affairs Department’s budget because land reform will be incorporated in the rural development function. The department will decide if it needs extra money and how much.
Nkwinti said the department will model its programmes on the pilot rural development node in Giyani, Limpopo.
”We will see what it will take to have a comprehensive programme and that will give us an indication of what our budget should be,” he said. ”We would want to replicate that model in other provinces.”