NATIONAL TREASURY Presentation to PCOF of Annual Report 2004/05 19 October 2005

2 Presentation Outline Highlights of FY05 Audited financial statements Measurable objectives & output targets National Treasury Human Resource Planning

3 HIGHLIGHTS OF ACHIEVEMENTS AND DEVELOPMENTS DURING 2004/05

4 Main Highlights National Treasury (1) 4.1% growth since FY01; approx. 600K jobs (Apr04 - Dec05) Robust consumer & producer confidence R12.0 m committed through Project Development Facility Launched CABRI to enhance budget reform in 2004 Improved access to financial services e.g. Dedicated Banks & Cooperative Banks Bills Implementation of the Financial Services Charter Ongoing work on the retirement fund tax reform Draft discussion document on “Environmental Fiscal Reform & Environmental Taxes” Completed Phase 1 of IFMS, Q4 of FY04

5 Working on tax-related guarantees for 2010 FIFA Soccer World Cup Issued retail bond = R1.3 bn in first year Upgrades in sovereign risk rating (Moody’s, Fitch, S&P) Rolled out the SCM Framework to municipalities Tabled audited consolidated financial statements in Parliament for FY04 Finalized the consolidated financial statements Introduced SCOA in Apr 04 Launched Pilot Phase of IDIP, Aug 04 (TAs appointed to 9 provincial education, 2 health & 2 roads departments) 94% of municipalities have MFMA implementation plans ( hits on MFMA Treasury website) Main Highlights National Treasury(2)

6 AUDITED FINANCIAL STATEMENTS

7 Annual Financial Statements 2004/05 Issued unqualified audit report Audit & Risk Committees functional Annual appropriation R14,022 bn Total savings of R532,0 m surrendered to NRF Departmental revenue R1,9 bn Operational budget R761 m Operational budget savings = R251,8 m (mainly from consultants, financial management systems, lower audit fees, underspending due to vacant posts, delays in refurbishment in Centurion, etc) R32,8 m approved rolled-overs from 2004/05 (for programmes 2, 3 & 8)

8 MEASURABLE OBJECTIVES AND OUTPUTS PER PROGRAMME

9 Prog 1: Administration Purpose: Provides strategic management, policy advice and administrative support to the National Treasury Sub-prgms: Ministry; Deputy Minister; Management and Corporate Services. Corporate Services comprises : Financial Management;Legal Services; Human Resources Management; Information Technology; Communications; Facilities Management and Security Management All targets met, Targets partially met incl. implementation of the transformation programme & provision systems and structures for a healthy and safe bus environment

10 Prog 2: Economic Planning and Budget Management Purpose: Provides professional advice & support to Minister on economic & fiscal policy, international financial relations, financial regulation, tax, IG financial relations, public financial & management of annual budget process 4 sub-prgms: Budget Off, Public Fin, IG Relations, & EPIFR BO, all targets met –PPP registered 53 projects during year in review PF, all targets met IG, all targets met, –IGFR published after 2004 elections EPIFR, met all targets

11 Prog 3: Asset & Liability Management Purpose: responsible for prudent management of Government financial assets and liabilities 5 sub-prgms: management; liability mgt; fin ops; strategy & risk mgt; asset management Most objectives were achieved 4 partially met targets were: –Integrated public debt management system –Phase II development of SOEs and contingent liability register –Market risk management policy –Risk management policy on contingent liability.

12 Prog 4: Specialist Functions Purpose: manages and regulates Govt’s supply chain processes, implements and maintains standardized financial systems, the PFMA and related other issues. 3 sub-prgms: supply chain mgt; PFMA impl; & Financial Systems 9 of 12 target objectives achieved Contracts awarded to HDIs exceeded expectation (39% instead of 20% planned) Targets partially met: - Strategic sourcing for 30% of all term contracts - Repeal of State Tender Board - Reports on value of contracts awarded to HDIs

13 Prog 5: Office of the Accountant General Purpose: manages and improves accounting policies & practices; ensures compliance with GRAP within the public sector 6 sub-prgms: national accounts; fin mgt improv; invest of public monies; service charges; contingent liabilities & audit 11 of 13 target objectives met Targets met outside of financial year: –Consolidation of annual financial statements, and the backlog

14 Prog 6:Provincial and LG Transfers Purpose: responsible for management of conditional grants, and top-up to equitable share allocations to provincial and local governments. Covers 3 grants administered directly by the NT i.e. PIG; LGFMG; LGRG All 6 performance targets attained

15 Prog 7: Civil & Military Pensions Purpose: Provide pension and medical benefits to former employees of government departments 2 sub-prgms: civil pensions and medical schemes; military pensions All 5 main targets were achieved Targets added after Stratplan included medical benefit administration amendments, addressing pre queries, policy document on medical treatment and expenses, & review of service level agreement with SANDF, etc Finalization & reconciliation of 1600 member records for Pre-92 Medihelp underway

16 Prog 8: Fiscal Transfers Purpose: meet international and other statutory obligations Transfer payments for FY05: Name of InstitutionR’000 CMA Compensation DBSA World Bank Group HIPC AfDB SARS FFC Secret Services FIC Commonwealth Fund 250, ,504 72,581 4,602,509 17,869 2,117,057 21,866 2,290 TOTAL7,124,663

17 BUDGET vs ACTUAL 2004/05 ProgrammeBudget R’000 Actual R’000 Saving R’000 Savings % Reasons for Savings PMG 1143,59889,34954, Delays in Centurion refurbishments; re-scoping of the document management system project; restructuring of IT and Security Units. PMG 2150,864135,73415, Difficulty attracting qualified staff. PMG 353,87626,26027, Under-spending on SOE Treasury operations and DFI projects PMG 4351,730226,416125, Internal restructuring; renegotiation of supplier contracts; compensation of employees PMG 565,18031,90233, Consultants; lower claims than expected; spent on vacant posts PMG 72,063,9661,921,319142,6476.9Unpredictable medical expenditure of retirees PMG 87,258,4427,124,664133,7781.8Retained allocations to the Apex Fund; delays in the purchase of ADB shares.

18 NATIONAL TREASURY’S HUMAN RESOURCES PLANNING

19 National Treasury’s Organisation Vacancy rate fallen to 25% from 43% previously To date vacancy rate fallen to 21% Successful implementation of the internship programme Main reasons for leaving NT: resignations (43%), contract expiry (26%), & transfers to other government departments (19%) Race and gender balance continues to improve 66% of training on high level skills e.g. legislators, managers,technicians, etc 92% of positions in salary band levels of 6-16

20 Employment and Vacancies 31 March 2005 * Includes Minister and Deputy Minister & additional appointments e.g. interns, contract & excess ProgrammeNumber of postsTotal posts filled Vacancy Rate % Programme Programme Programme Programme Programme Total873655*25

21 Thank You