1 National Treasury 2008/09 Annual Report Presentation to Parliament Lesetja Kganyago, Director General 21 October 2009

2 Aim and strategic focus areas Advance economic growth and income redistribution Prepare a sound and sustainable national budget and equitable division of resources Strive to equitably and efficiently raise fiscal revenue, while enhancing efficiency and competitiveness of the South African economy Ensure sound management of government’s financial assets and liabilities Promote transparency and enforce effective financial management Contribute to employment creation National Treasury draws its mandate from Chapter 2 of the Public Finance Management Act based on Chapter 13 of the Constitution. It is responsible for coordinating macro-economic policy. Its objectives are to:

3 Operational and Policy Responsibilities Economic Policy and International Financial Relations -Economic analysis and forecasting -Tax and Financial Sector Policy - International and Regional Economic Policy Public Finance and Budget Management -Budget Office -Public Finance -Intergovernmental Relations Assets and Liability Management Financial Management Systems Financial Accounting and Reporting

4 In 2008 South Africa’s budget documents were rated second highest in the world in terms of transparency by the Open Budget Initiative The feasibilities of capital bids were assessed The 2009 ENE included data on performance information and also tracked development assistance programmes for each national department A revised Public Finance Management Bill was submitted to Cabinet in May 2008, with substantial changes to the governance of public entities Budget submissions, policy proposals and expenditure plans of national departments and state enterprises were evaluated Spending and service delivery trends were monitored StatsSA was provided with assistance in budgeting and planning for household surveys and the 2011 national census Programme 2: Public Finance and Budget Management

Programme 2 (cont): Public Finance and Budget Management Provided advice and support to the Department of Health on projects that amounted to a further R19 billion over the MTEF Technical assistance was provided to 82 projects Offered project management advice to departments and host cities responsible for 2010, in addition to overseeing cost control and contract management The Neighbourhood Development Programme offered 86 grants to 51 municipalities, with a value of R8.75 billion 32 full-time technical advisors were deployed to all provinces to assist with infrastructure planning and implementation 5

Programme 2 (cont): Public Finance and Budget Management Developed an internet-based training programme in budget formulation for managers in the public service Coordinated MFMA implementation in all municipalities and provided support to 25 municipalities and all provincial treasuries Introduced new conditional grants to provinces (Ilima/letsema, overload control grant and Sani Pass grant) Reviewed the local government fiscal framework to provide greater financial support to poor and rural municipalities Deployed 503 financial management interns to municipalities as part of building capacity in municipalities 6

Programme 3: Asset and Liability Management Moody’s Investors Service affirmed South Africa’s rating outlook as positive. Three other rating agencies revised their ratings outlook from stable to negative Financed the revised gross borrowing requirement of R50.9 billion Completed the financial review of the PBMR project Submitted the DFI review report to Cabinet in 2008 Implementation of the new foreign debt module was delayed due to interface incompatibilities with other parties The domestic debt composition was 29.7% non-fixed rate and 70.3% fixed-rate debt. Conducted domestic and foreign non-deal road shows with investors Foreign and domestic debt was split 15.5% and 84.5% respectively 7

Programme 4: Financial Management and Systems Established a grievance mechanism to deal with disputes and complaints arising from tender processes Facilitated 31 transversal contracts New SCM framework delayed due to postponement in considering the revised PFMA by Parliament Alignment of preferential procurement with the aims of the BBBEE Act and related strategy not completed due to delays in considering the revised PFMA Rolled out strategic sourcing principles to 30% of national departments as planned Further rolled out the IMFS 98% availability of financial management systems during working hours 8

Programme 5: Financial Accounting and Reporting Produced consolidated financial statements Developed and refined accounting policies to comply with the standards issued by the ASB Developed a template for municipalities for their annual financial statements Developed and published a GRAP booklet 17 students participated in the training outside public practice (TOPP) programme Developed a capacity-building model for finance personnel in national and provincial departments 9

Programme 6 Econ. Policy and Int. Financial Relations Developed a principal components model to assist in forecasting short(er) term GDP growth outcomes Improved policy focus for the MTBPS Produced economic assessments of policy proposals Analysed the economic impact of electricity tariff increases Presented to Cabinet on the causes of food price increases and proposed policy responses Improvements to estimates of various tax elasticities Published various pieces of legislation (Taxation and Revenue Laws Amendment Bill, Minerals and Petroleum Resources Royalty Bill, etc) 10

Programme 6 (cont): Econ. Policy and Int. Financial Relations Published recommendations of the International Growth and Advisory Panel Contributed to the G20 resolutions (with a focus on global financial regulations and financial stability) Participated in G20 to promote governance reforms in the IMF/World Bank Established the Cooperative Banks Development Agency and appointed an MD Published the micro-insurance discussion paper Proposed a review of the SACU formula and developed a database of SACU payments Participated and contributed to meetings of the AfDB, SADC, UNECA and CABRI 11

Programme 7: Provincial and Local Government Transfers R7.2 billion was transferred to all provinces through the infrastructure grant to provinces (portions of the third and fourth instalments were delayed due to under-expenditure and non-compliance) The local government financial management grant was transferred to 283 municipalities Introduced the asset transfer, budget and reporting regulations for municipalities With regard to capacity building municipalities had 2 interns and 58 municipalities had 1 intern each. Only 39 municipalities had no interns All municipalities received support on the implementation of the MFMA The local government restructuring grant reached financial close on 31 March 2008, having achieved its intended objectives 12

Programme 8: Civil and Military Pensions, Contributions to Funds and Other Benefits Government’s contribution to pensions and other benefits on behalf of retired civil servants increased from R2.2 billion in 2007/08 to R2.3 billion in 2008/09 A total of Injury on Duty beneficiaries were paid on a monthly basis Re-designed the special pensions application forms Launch of the special pensions awareness campaign delayed due to protracted internal processes 13

Programme 9: Fiscal Transfers Transferred over R20 billion to other institutions, including the R10 billion loan to Eskom to assist with sustainable development of infrastructure for electricity in South Africa Other transfers include: SARS FFC FIC DBSA [Siyenza Manje) AfDB 14

Programme 1: Administration Implemented cost-cutting measures (flights, accommodation and catering) Enhanced the graduate development programme. Acceptance rates reached 81 per cent for general internship applicants, and 70 per cent for training outside public practice (TOPP) applicants, coaching and mentoring programmes for senior managers. Developed customised Web publishing solutions Provided comprehensive legal support to the department and the ministry and oversaw the passing of legislation through parliament Provided a reliable communication, marketing and media service to the department and ministry Ensured a safe working environment and optimal availability of facilities Developed project management capacity 15

THANK YOU 16