National Treasury

Strategic Plan

2006/07 – 2008/09

Presentation to Portfolio Committee on Finance23 May 2006

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

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

Planning and budgeting cycle

May 06

Feb 06

Jan 06

November

April - Aug

May 0505/06 – 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

Aim and strategic objectivesPromote 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

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

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

Resources that support key priorities

Total allocation R’ million (add. resources - 2006)

2006/07 2007/08 2008/09

IDIP R30,5 R30,5 R30,5

G20 secretariat R2 R10 R1

IFMS R250 (R200 ) R398 (R350 ) R483 (R420)

Provincial infrastructure

R4,118 R5,234 R5,696

Neighborhood Development Partnership Grant

R50 R950 R1,500

New budget R10,4 bn in 2006/07, R10,9 bn in 2007/08, and R11,4 bn in 2008/09

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

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

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

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.

Critical revisions to outputs and targets

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

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

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

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

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

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

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

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

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

Thank you