1. National Treasury Strategic Plan 2006/07 – 2008/09 Presentation to Portfolio Committee on Finance 23 May 2006

2. Overview of presentation Budgeting and accountability cycle Planning and budgeting cycle of NT Aim and strategic objectives Preliminary outcome for 2005/06 Key policy priorities for 2006/07 – 2008/09 Resources that support policy priorities Critical revisions to 2005 – 2008 plan –Programme objectives –Outputs –Revised targets How objectives will be achieved –Personnel strategy

3. Budgeting and Accountability Cycle Purpose today is to seek approval from PCOF for current 2006/07 budget and two outer years (2007/08 & 2008/09) Annual report in Oct will report on past financial year 2005/06 –Note that ENE and strategic plan finalised in Feb 2006 with Budget, 10 months into past 2005/06 financial year 2006 MTEF based on baseline from 2005 MTEF –Focus on additional allocations to 2005 baseline for 2006/07 –Focus on changes to measurable objectives compared to 2005 strategic plan Preliminary assessment of 2005/06 financial year –Focus on projects that carry-over to 2006/07

4. Planning and budgeting cycle May 06 Feb 06 Jan 06 November April - Aug May 05 05/06 – 07/08 NT strategic plan tabled Developed budget proposals for 2006 MTEF Cabinet approves framework for 2006 Budget NT plan revised and ENE chapter finalised 2006 MTEF Budget tabled National Treasury table revised medium-term plan

5. Aim and strategic objectives Promote economic development, good governance, social progress and rising living standards through the accountable, economical, equitable and sustainable management of public finances 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 SA economy Sound management of Government’s financial assets and liabilities Promote transparency and enforce effective financial management

6. Preliminary Outcome for 2005/06 Annual Report will provide final report, including audited financial statements NT spent R13,1bn out of R14,2 bn adjusted budget R1,1 bn not spent or transferred –R841,6 mil not transferred to provinces/municipalities for failing to adhere to conditions for grants –R69,6 mil saved on medical expenditure of retirees –Non-transfer of R122,3 mil to ADB, CMA and APEX Core NT budget in 2005/06 is R9,8 bn, of which 9,6 bn spent

7. Key policy priorities for 2006/07 – 2008/09 Accelerate economic growth in line with ASGI-SA Improve monitoring and coordination of capital projects (infrastructure) –ensure efficiency and quality of spending Reinforce budget reform and financial management at the local level, and increase local government budgets in support of critical services Modernise financial management system (IFMS) Achieve accountability through effective management iro REAL Host the G20 secretariat in 2007 calendar year

8. Resources that support key priorities Total allocation R’ million (add. resources - 2006) 2006/072007/082008/09 IDIPR30,5 G20 secretariatR2R10R1 IFMSR250 (R200 )R398 (R350 )R483 (R420) Provincial infrastructure R4,118R5,234R5,696 Neighborhood Development Partnership Grant R50R950R1,500 New budget R10,4 bn in 2006/07, R10,9 bn in 2007/08, and R11,4 bn in 2008/09

9. Accelerating Growth in SA Key role for NT is to provide economic analysis and modelling support for ASGI-SA –Assessing model for internal consistency –Major boost to improve research capacity of SA institutions through link with international economists Key role in developing growth diagnostic and identifying key binding constraints NT to re-organise EPIFR division to focus more on growth, employment and macroeconomic stability

10. Infrastructure Development Programme (IDIP) Recent achievements 13 Technical Experts employed to assist with infrastructure delivery Spending on CAPEX increased by 24% Underspending reduced to 16% of a bigger budget Medium-term plans Continue support in education Extend technical support to: –Public Works in 2006/07 –Prepare for extension to health in 2007 Deepen improved infrastructure planning and management

11. Integrated Financial Management System Recent achievements Systems Master Plan, prospectus and User Requirement Statements completed Alignment of current systems to IFMS Positioning of SITA for Prime Systems Integrator role Medium-term plans Phase II: Acquiring infrastructure for IFMS applications –Hardware –Software –Commercial operating off- the-shelf system packages Phase III: Full implementation over 5 year period

12. Achieve accountability through effective management iro REAL Recent achievements CFS published on time for first time Asset management guide rolled out in all departments Internal audit assessments for all departments Risk assessments done in Northern Cape Enacted Auditing Profession Act Medium-term plans Implementation of new GRAP standards Implementing monthly management accounts Increasing support to all stake-holders iro accounting, risk management and internal auditing.

13. Critical revisions to outputs and targets

14. Revisions to 2005 – 2008 plan: Administration MO: Provide strategic management and administrative support to the National Treasury, giving managerial leadership to the work of the Department.. Output: Establishment of an internal audit unit 2008/09 target: Full unit capacity achieved Output: Facilitate the development of a strategic leadership capability New 2006/07 target: Organisational development framework developed and implemented

15. Revisions to 2005 – 2008 plan: Budget Office and Public Finance MO: Promote growth, social development and poverty reduction through sound economic, fiscal and financial policies, efficient revenue measures and the effective, efficient and appropriate allocation of public funds New output for Budget Office: Central registry of listed government agencies, public entities and business enterprises, and oversight framework 2006/07 target: Policy and legislative amendments approved 2007/08 – 2008/09 target: Implementation of policy and legislation Output for Public Finance: Expenditure analysis New 2006/07 - 2007/08 target: IJS sectoral expenditure review undertaken. New 2006/07 target: Monitoring plan for social assistance conditional grants phased in. New output for Public Finance: Financial management support 2006/07 – 2008/09 target: Specific areas: Revenue administration in Justice Fin management and HANIS implementation in DHA Est. property agency in Foreign Affairs

16. Revisions to 2005 – 2008 plan: Intergovernmental Fiscal Relations MO: Promote growth, social development and poverty reduction through sound economic, fiscal and financial policies, efficient revenue measures and the effective, efficient and appropriate allocation of public funds Output for IGR: Improve infrastructure delivery in provinces New 2006/07 – 2007/08 target: Nine TA teams assigned to 18 provincial departments each year New output for IGR: Reporting and monitoring system (provincial infrastructure) 2006/07 – 2008/09 target: Quarterly report for provincial and local sphere. New output for IGR: Provincial public entities review 2006/07 – 2008/09 target: Database in 9 provinces, quarterly report published

17. Revised targets: Economic Policy MO: Promote growth, employment and macroeconomic stability through research and modelling of the economy New output for Economic Policy: Research on growth 2006/07 target: Research support for Cabinet Makgotla 2007/08 – 2008/09 target: Research and policy outputs for key economic sectors New output for Economic Policy: Microeconomic analysis 2006/07 – 2008/09 target: Institutional structure for microeconomic assessments established and functional

18. Revised targets: Tax and Financial Sector MO: Promote growth, employment and macro stability, through sound tax and financial sector policies and regional integration Output for financial sector policy: Financial sector policy advice, legislation and regulations New 2007/08 and 2008/09 target: Submit new draft of Dedicated Banks Bill in 2007/08, and Co-operative Banks Bill in 2008/09 Output for tax policy: Tax policy analysis and advice New target for 2006/07:: Discussion papers on synfuel and environmental taxes New output for International Financial Relations: International Relations and financial integration 2006/7 – 2008/09 target: Greater integration in SACU and SADC Preparations and chairing of G20 in 2007

19. Revised targets: Assets and Liability Management MO: Manage government’s financial asset and liability portfolio in a way that ensures prudent cash management, asset restructuring, financial management and optimal management of domestic and foreign debt. Output: Reduce debt service costs Revised 2006/07 target: 3 per cent of GDP Revised 2007/08 target: 2,8 per cent of GDP 2008/09 target: 2,7 per cent of GDP Output: Coordination of intergovernmental cash New 2006/07 – 2008/09 target: Saving of 2 per cent on borrowing costs Output: Fully automated and integrated treasury management systems New 2006/07 target: Acquisition and configuration of debt and investment management system New 2007/08 – 2008/09 target: Implementation of debt and investment management system Implementation of DFI review, and financial modeling of appropriate dividend policies for GBE’s delayed by 1 year

20. Revised targets: Financial Accounting and Reporting Measurable objectives: Achieve accountability to the general public and the international community by promoting transparency and effective management in respect of revenue, expenditure, assets and liabilities in public sector Output : Implement specimen formats for consolidated annual financial statements New 06/07 target : 31 May 06 for 05/06 28 Feb 07 for 06/07 New 07/08 – 08/09 target : 1 April 07 for 07/08 1 April 08 for 08/09 New output: Implementation of reporting framework 2006/07 – 2008/09 target: Departments: Jan – Feb 07 for 07.08 Municipalities: May - June 07 for 07/08 New output: Enhance service delivery capability of audit committees and internal auditors 2006/07 – 2008/09 target: Nine provincial training sessions and workshops per year. Annual IA conference

21. How objectives will be achieved Correct policy decisions, smart planning, disciplined implementation and hard work Filling of vacancies with best qualified, experienced and skilled staff Improve internal and external coordination and information flow Increasing support to departments Continued professional development of all staff

22. Personnel plan Total vacancies decreased from 299 to 152 between 31 March 2005 and 31 March 2006 Reason for reduction: –Abolishment of non-budgeted positions –Appointed employees additional to the establishment against funded vacancies –Appointed interns into funded vacancies –Reserved positions for Leadership Talent Pool –Tight project management in the filling of positions Plan to recruit 140 new employees during 2006/07

23. Thank you