national treasury
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National Treasury. Strategic Plan Update – 2007/08. Presentation to Portfolio and Select Committees on Finance 22 May 2007. Structure. - PowerPoint PPT PresentationTRANSCRIPT
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National Treasury
Strategic Plan
Update – 2007/08
Presentation to Portfolio and Select Committees on Finance22 May 2007
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Structure
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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
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Operational and Policy Responsibilities
• Economic and Fiscal Policy- Economic Policy- Tax, Finance and International Economics
• Public Finance and Budget Management- Budget Office- Public Finance- Intergovernmental Relations
• Assets and Liability Management
• Financial Management Systems
• Financial Accounting and Reporting
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Key focus areas for 2007/08Programme 2
Budget Coordination
• Budget process improvements focussed on effective service delivery and better value for money
• Expanding the use of PPPs to improve value for money through appropriate risk transfer
• Oversight over the 2010 FIFA World Cup funding, especially containing cost escalations
• Improving the quality of performance information published in the budget
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Sectoral Priorities• Investment in the built environment, road and
rail transport infrastructure
• Information systems in the integrated justice sector reform programme
• Asset management in government buildings maintenance and accommodation
• Development of a contributory social security system
• Education, health and skills development
Key focus areas for 2007/08Programme 2 (continued)
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Intergovernmental Relations
• Foster further equity in the division of nationally raised revenues and intergovernmental transfers
• To strengthen financial management, governance, accountability and capacity in local government
• Faciliatate implementation of initiatives aimed at building capacity to accelerate infrastructure delivery
• Fund the Siyenza Manje initiative to unlock service delivery and infrastructure at local government level
• Rollout of Infrastructure Delivery Improvement Programme (IDIP) in the Health Sector
Key focus areas for 2007/08Programme 2 (continued)
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• Active management of debt with a view to reducing debt service cost, subject to acceptable risk levels
• Sound forecasting and prudent management of Government’s cash flows
• Review and policy formulation relating to the mandate of the Development Finance Institutions (DFI’s)
Key focus areas for 2007/08Programme 3
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• Coordination and implementation of the Integrated Financial Management Systems (IFMS)
• Compliance with the standards of Generally Recognised Accounting Practice (GRAP) in preparation of timely and accurately consolidated financial statements
• Emphasis on widespread risk management in departmental operations
• Alignment of the PPPF Act and BBBEE Act
Key focus areas for 2007/08Programme 4 & 5
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• Reforming the system of retirement funding
• Enhancing accessibility to financial services
• Replacing STC with dividends tax, and finalisation of Mining Royalty Bill and Diamond Export Levy Bill
• Africa’s economic development and regional integration in SADC
• Strengthened economic policy and forecasting, covering microeconomic analysis, G20 policy themes, and continuing research on growth
• Further development of research capacity to address key economic focal areas such as growth, employment, banking and taxation
Key focus areas for 2007/08Programme 6
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Fiscal Transfers
• Provincial and Local Transfers (Programme 7)
• Post retirement medical benefits, Civil and Military Pensions (Programme 8)
• International Financial Transfers
• South African Revenue Service
• Secret Services
• Development Bank of South Africa (Siyenza Manje)
• Financial Intelligence Centre
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Public entities and other financial responsibilities
• Government Employment Pension Fund and Pensions Administration
• Public Investment Corporation
• Development Bank of Southern Africa
• Financial Services Board
• Monetary policy coordination with South African Reserve Bank
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Key focus areas for 2007/08 – 2008/09:Programme 1
• Continued strategic role in developing and implementing an integrated client relations management strategy
• Further enhancement of the National Treasury’s Talent Management Strategy to attract and retain the requisite skills
• Contribute to the establishment of a knowledge-management culture within the National Treasury
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Summary of Expenditure Operational Budget
Budget
2006/07
R’000
Preliminary Outcome
2006/07
R’000
Budget
2007/08
R’000
1. Administration* 173 392 161 641 143 732
2. Public Finance and Budget
Management
157 533 138 531 172 407
3. Asset & Liability Management 59 155 41 271 57 739
4. Financial Management and
Systems
363 314 196 378 722 237
5. Financial Accounting and
Reporting
75 644 65 785 82 076
6. Economic Policy and International
Financial Relations
74 855 68 938 86 663
TOTAL 903 893 672 544 1 264 854
* Administration as % of total 19.18% 24.03% 11,36%
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Summary of Expenditure Transfers
Budget
2006/07
R’000
Preliminary Outcome
2006/07
R’000
Budget
2007/08
R’000
Operational Budget 903 893 672 544 1 264 854
6 (7). Provincial and local
government transfers
5 677 155 5 497 155 7 159 275
7 (8). Civil and military pensions,
contributions to funds and
other benefits
2 189 085 2 048 701 2 338 308
8 (9). Fiscal Transfers 7 959 448 7 897 221 8 945 741
TOTAL BUDGET 16 729 581 16 115 621 19 708 178
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Personnel plan
• 31 March 2006 to 31 March 2007:– 209 vacant positions filled– 152 people left the National Treasury
• Net effect: total vacancies decreased from 190 to 133 between 31 March 2006 and 31 March 2007
• Reasons for reduction:– Implemented a Project Management approach– Assigned dedicated resources to the project – Regular monitoring and tracking of progress– Improved client relationships
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Staff Profile as at 31 March 2007
Management Employees below Management
GENDER (SMS)
MALE66%
FEMALE34%
RACE (SMS)
BLACK63%
WHITE37%
GENDER (NON-SMS)
MALE39%
FEMALE61%
RACE (NON-SMS)
BLACK67%
WHITE33%
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Thank you
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Outputs and Targets per Programme
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Programme 1: Administration
Measurable objective: Improve the quality of financial reporting by ensuring that appropriate policies and procedures are developed and implemented
Output 2007/08 Target/ Milestone
Develop and implement an integrated client relationship management strategy
Client relationship management strategy developed
Contribute to the establishment of a knowledge management culture in National Treasury
Implementation of the agreed solution 70% complete
Facilitate the development of strategic capability
30% of talent management strategy implemented
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Programme 2:Public Finance and Budget Management
Public Finance
Measurable objective: Promote growth, social development and poverty reduction through sound fiscal and financial policies, and the effective, efficient and appropriate allocation of public funds
Output 2007/08 Target/ Milestone
Sectoral and departmental policy advice
Review of budget submissions and preparation of estimates to meet budget process deadlinesIn-depth assessment of programmes and sectoral trends5-10 review projects annually
Expenditure analysis Enhancement of in-year expenditure monitoring and performance information systems over medium term Continued phasing in of consolidated departmental and agency estimates and expenditure reports
Oversight of 2010 FIFA World Cup funding
Completion of stadiums and other 2010 FIFA World Cup projects within budget
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Programme 2:Public Finance and Budget Management
Budget Office
Measurable objective: Promote growth, social development and poverty reduction through sound fiscal and financial policies, and the effective, efficient and appropriate allocation of public funds
Output 2007/08 Target/ Milestone
Annual budget framework and division of revenue
Budget framework for MTBPS and Budget Review
Budget Review, Estimates of National Expenditure, appropriation legislation, treasury guidelines and public finance statistics
Timely publication, accuracy of scope and quality of content
Expenditure planning and budget process management
Improved performance information as part of expenditure planning; improved infrastructure planning and project evaluation
International cooperation agreements
Improved coordination between ODA planning and budget process in the medium term
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Programme 2:Public Finance and Budget Management
Intergovernmental Relations Measurable objective: Promote growth, social development and poverty reduction through sound fiscal and financial policies, and the effective, efficient and appropriate allocation of public funds
Output 2007/08 Target/ Milestone
Provincial Budget Framework Provincial budget framework finalised by September
Local Government Budget Framework
Local government budget framework finalised by September
Preparation of Division of Revenue Bill and Annexure E and the implementation of the Act
Timely publication, accuracy of contentTransfers made in accordance with the Division of Revenue Act
Support and training for provincial and municipal government with:•Financial management reforms•Infrastructure planning•Service delivery
Implementation of financial management programmes and reforms in 9 provincial treasuriesQuarterly CFO Forum meetingsOne budget formulation course focusing on legislatures One budget analysis course focussing on provincial treasuries 4 departments receiving technical assistanceAll provinces submit quarterly reports on infrastructure spending on timeIncrease proportion of capex expenditure to 95 per cent or more
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Programme 2:Public Finance and Budget Management
Intergovernmental Relations (Continued)
Measurable objective: Promote growth, social development and poverty reduction through sound fiscal and financial policies, and the effective, efficient and appropriate allocation of public funds
Output 2007/08 Target/ Milestone
Support and training for…(Contd) 80 rural municipalities receiving technical assistance144 technical assistants100 young professionals receiving professional experience
Support and training for
municipal government with:•financial management reforms,•infrastructure planning•service delivery
157 high- and medium-capacity municipalities Implementation of budget reform in 25 largest municipalities Co-ordinated Finance Management Reforms
Interns through the FM Grant programme in 50 municipalities
Section 32 of PFMA quarterly reports on spending trends
Accurate quarterly reports on provincial budget ImplementationEnhanced service delivery information
Section 71 of MFMA quarterlyreports on spending trends
Publication of in-year reports on financial performance in 50 municipalities
Monitoring provincial departments service delivery against pre-determined objectives
Accurate quarterly reports on performance information
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Programme 2:Public Finance and Budget Management
Technical and Management Support Measurable objective: Promote growth, social development and poverty reduction through sound fiscal and financial policies, and the effective, efficient and appropriate allocation of public funds
Output 2007/08 Target/ Milestone
Programme Project management support
40 technical assistance projects
Develop technical assistance cost-recovery framework
Black economic empowerment(BEE) participation in public private partnerships (PPPs)
Gazetting of PPP BEE codes with DTI
PPP programme and projects Improve quality and flow of projects, streamlining advisory service, use of project development facility and neighbourhood development partnership grant Provide technical assistance to 30 new municipal projects to access the neighbourhood development partnership grant Provide technical assistance for 10 additional national and provincial PPPs Register 7 new municipal PPPs Reach financial closure for 6 new PPPs
Facilitate development of PPPs for municipal services
Publication of PPP municipal guidelines to assist municipalities with the implementation of new projects
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Programme 3 : Assets and Liability Management
Asset Management Measurable objective: Manage government’s financial asset and liability portfolio in a way that ensures prudent cash management, asset restructuring, financial management and optimal management of the state’s domestic and foreign debt
Output 2007/08 Target/ Milestone
Present report on review of mandates of development finance institutions
Completed by end-August 2007
DFI Systems developed Completed by end-December 2007
Promote appropriate treasurymanagement policies and practices for government businessenterprises & provincial, municipal treasuries
100% follow-ups done on implementation of guidelines
Formulate GBE dividend policies 60% modelled, 40% of GBEs
Prudent management of GBEs PFMA amendments to reflect prudent stakeholder managementContinued interventions and monitoring of GBEs
Electronic annual financial statements of GBEs on the GBE register
40% submitting electronically
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Programme 3 : Assets and Liability Management
Liability Management
Measurable objective: Manage government’s financial asset and liability portfolio in a way that ensures prudent cash management, asset restructuring, financial management and optimal management of the state’s domestic and foreign debt
Output 2007/08 Target/ Milestone
Finance government’s net borrowing requirements
Net negative issuance of R11,6 billion
Sound domestic and foreign debt management policies
Concentrate issuance in benchmark bondsForeign debt portfolio restructured to a minimum of US$350million
Reduce debt service cost 2,7% of GDP
Contribute to the development of financial markets
Introduction of a new inflation-linked bond maturing in
2027/28 and inflation-linked retail bonds
Sound investor relations Annual domestic and foreign road shows, teleconferences andmeetings
Timely dissemination of reliable information
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Programme 3 : Assets and Liability Management
Financial Operations Measurable objective: Manage government’s financial asset and liability portfolio in a way that ensures prudent cash management, asset restructuring, financial management and optimal management of the state’s domestic and foreign debt
Output 2007/08 Target/ Milestone
Sound cash forecasts Sound forecasting and prudent management of Government’s cash flows
Optimise return on investment Quarterly analysis and reviewsContinuous improvements to intergovernmental cash coordination Saving of 2% on borrowing costs compared to borrowingfrom commercial banks
Annual financial statements and market reports
Compliance with PFMA reporting requirements regardingannual financial statements
Timely dissemination of reliable market information
Treasury management systems Rollout of the new back-office system Implementing and actively managing the revised systemsintegration strategy
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Programme 3 : Assets and Liability Management
Strategy and Risk Management Measurable objective: Manage government’s financial asset and liability portfolio in a way that ensures prudent cash management, asset restructuring, financial management and optimal management of the state’s domestic and foreign debt
Output 2007/08 Target/ Milestone
Minimise and mitigate risks emanating from government debt portfolio (market risk)
Review of benchmarks and implement
Review of appropriate new issuances and debt consolidations
Minimise and mitigate counterparty risks emanating from investment of surplus cash
Review of investment ratios and limits
Minimise and mitigate sovereign credit rating risks
Semi-annual sovereign credit rating reviews
Manage contingent liabilities appropriately
Review target
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Programme 4: Financial Management and Systems Supply Chain Management
Measurable objective: Regulate and oversee public-sector supply-chain management through policy formulation, and improve the quality of financial reporting by ensuring that appropriate policies and procedures are developed and implemented
Output 2007/08 Target/ Milestone
Align preferential procurement system with broad-based BEE
Promulgation of revised PPPFA and its regulations by March 2008
Regulate and monitor supply-chain management policy and manage general supply contracts on behalf of government
Phased implementation strategy and reports to Cabinet and Standing Committee on Public Accounts (SCOPA) – March 2007
Issue further practice notes during 2007/08
Introduce strategic sourcing principles to enhance value for money
Introduce strategic sourcing strategies for 70% of all term contracts
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Programme 4: Financial Management and Systems
PFMA Implementation and Coordination
Measurable objective: Regulate and oversee public-sector supply-chain management through policy formulation, and improve the quality of financial reporting by ensuring that appropriate policies and procedures are developed and implemented
Output 2007/08 Target/ Milestone
Coordinate implementation of PFMA and related training initiatives, and monitor implementation in institutions to which the act applies
Report on progress with PFMA implementation in July 2007
Report to Cabinet in November 2007
Number of courses presented to trainees to assist with implementation of financial reforms:
Supply-chain management - 266 courses – 5 320 trainees
Internal audit and risk management - 105 courses – 2 310 trainees
Accounting-related courses - 260 courses – 5 720 trainees
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Programme 4: Financial Management and Systems
Financial Systems Measurable objective: Regulate and oversee public-sector supply-chain management through policy formulation, and improve the quality of financial reporting by ensuring that appropriate policies and procedures are developed and implemented
Output 2007/08 Target/ Milestone
Implement, maintain and improve financial management systems
98% system availability during office hoursPhase II – detailed technical design of systems specifications andorganisational preparation: September 2007Award integrated development environment tender – June 2007Fast-Track Phase IIICommence development of asset management system – June2007Award procurement commercial off-the-shelf (COTS) tender – July 2007Customise procurement module – July 2007-March 2008HR COTS TenderPublish tender – April 2007Award tender – October 2007Customise HR COTS solution – October 2007 - March 2008
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Programme 5: Financial Accounting and Reporting Financial Reporting for National Accounts
Measurable objective: 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 the public sector
Output 2007/08 Target/ Milestone
Monthly statements of actual revenue and expenditure regarding the National Revenue Fund
Within 30 days of month-end
Specimen formats for consolidated annual financial statements and conduct implementation sessions
28 February 2007 for 2006/07
Consolidated AFS for national government
Submitted to Auditor-General – 30 August 2007Tabled – 31 October 2007
AFS for the Reconstruction and Development Programme Fund
31 October 2007
Support implementation of reporting framework and related topics
By February 2008 for 2008/09 financial year - May to June
4 chief financial officers’ forums per year
2 provincial accountants-general forums per year
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Programme 5: Financial Accounting and Reporting
Financial Management ImprovementMeasurable objective: 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 the public sector
Output 2007/08 Target/ Milestone
Enhanced framework for the transition from cash to accrual basis of accounting
Updated motivation paper by 31 March 2008
Annual financial reporting framework in line with financial management improvement plan
Reporting framework document for departments - 31 March 2008Specimen AFS template issued Final preparation guide for AFS issuedPreparation guide for annual report
Accounting policies and practices in support of framework for transition from cash to accrual basis of accounting
100% alignment to approved standards effective dates
Internal audit and risk management frameworks for national and provincial departments
Approval of the revised framework by 31 December 2007
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Programme 5: Financial Accounting and Reporting
Financial Management Improvement (Continued)Measurable objective: 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 the public sector
Output 2007/08 Target/ Milestone
Enhance service-delivery capability of audit committees, internal auditors and risk managers through training programmes and workshops
31 December 2007At least one national workshop and one workshop per provinceAnnual internal audit indaba 31 March 2008Software operational at 40 sites (departments, municipalities andentities) 31 March 2008
Conduct or Facilitate Quality assessment reviews in Local Government and qualifying departments
Report on QARs for 20 municipalities submitted to relevant councils by 31 March 2008External QARs facilitated for all qualifying departments by 31 March 2008 (all departments qualifying in terms of the standards)
Conduct survey of status of risk management in national, provincial, local government and entities
Survey completed for public entities 31 March 2008
Public sector audit committee forum Agreed terms of reference - 30 September 2007Database maintained - 31 December 2007
Review and report to DG 31 March 2008
Participation on committees 100% participation (National Departments)20% participation (Provincial and Local)
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Programme 6: Economic Policy & International Financial Relations Management and Research
Measurable objective: Provide policy advice to promote growth, employment, macroeconomic
stability and regional integration Output 2007/08 Target/ Milestone
Publication and promotion of economic research relevant to South Africa
Publication of papers on growth and employment, and retirement reform in 2007
Output 2007/08 Target/ Milestone
Reforming system of retirement funding
Further research and concept papers (at least 2) to supportretirement reform
Financial stability Support regulatory agencies to monitor stability of financialsectorTabling and enactment of Basle II amendments before 1 January2008
Financial sector transformation and access
Gazetting of financial sector charter and tabling of Cooperative Banks Bill by 10 December 2007
Financial Sector Policy
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Programme 6: Economic Policy & International Financial Relations Tax Policy
Measurable objective: Provide policy advice to promote growth, employment, macroeconomic
stability and regional integration Output 2007/08 Target/ Milestone
Tax proposals for the annual budget
Publication on Budget Day in 2008
Tax legislation and amendments Taxation and Revenue Laws Amendment BillMinerals and Petroleum Royalty BillDiamond export levy all tabled 10 December 2007
Output 2007/08 Target/ Milestone
Promotion of African and Southern African economic integration
Participate in process to develop a road map for regionalintegration in Southern African Development CommunityDevelop proposals and engage within SACU to review revenue-sharing formula during 2007
Promotion of G20 dialogue on Financial and Financial issues
Arrange 5 workshops and 2 meetings of the forum
International Economics
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Programme 6: Economic Policy & International Financial Relations Economic Policy
Measurable objective: Provide policy advice to promote growth, employment, macroeconomic
stability and regional integration Output 2007/08 Target/ Milestone
Economic policy inputs to the Budget Microeconomic analysis
Work processes developed by March 2007
Institutional structure for microeconomic assessment
establishment and fully functional
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Programme 7: Provincial & Local Government Transfers
Provincial Infrastructure Grant Measurable objective: Improve the pace and quality of provincial infrastructure investment and asset maintenance, promote financial management reforms in municipalities, and restructure service delivery in municipalities with large budgets
Output 2007/08 Target/ Milestone
Monitoring provincial infrastructure development
Transfers made by 31 March 2008 in compliance with Division
of Revenue Act
Local Government Financial Management and Restructuring Grants
Output 2007/08 Target/ Milestone
Monitoring municipal financial management reforms and restructuring
Transfers made by 31 March 2008Appointment of at least 2 interns in municipalities (a total of 566 graduates)Improved reporting in 8 municipalities through new systemBudget reforms in 50 municipalitiesImplementation of MFMA in all municipalities
Funding assistance to restructure and modernise service delivery in large- budget municipalities
Managing and overseeing compliance with conditions of grantsby successful municipalities by 2008
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Programme 7: Provincial & Local Government Transfers Neighbourhood Development Partnership Grant
Measurable objective: Improve the pace and quality of provincial infrastructure investment and asset maintenance, promote financial management reforms in municipalities, and restructure service delivery in municipalities with large budgets
Output 2007/08 Target/ Milestone
Technical assistance to municipalities
50 projects receiving technical assistance by October 2007
Capital grant to municipalities 1 project to have started construction by October 2007
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Programme 8: Civil and Military Pensions, Contributions to Funds and Other Benefits
Civil Pensions and Contribution to Funds
Measurable objective: To ensure the payment of benefits and awards to beneficiaries of departments, state-aided bodies and other specified bodies in terms of various statutes, collective-bargaining agreements and other commitments
Output 2007/08 Target/ Milestone
Payment of pension benefits and contributions to funds (including special pensions)
17 645 beneficiaries paid monthly
Payment of contributions to medical aid schemes
67 780 members per month
Payment of risk and administration fees to the Political Office Bearers’ Pension Fund
Payment of risk and administration fees in respect of 900
members monthly
Notify beneficiaries of special pensions amendments
Ensure maximum awareness and applications by 31 December
2006
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Programme 8: Civil and Military Pensions, Contributions to Funds and Other Benefits
Military Pensions and Other Benefits
Measurable objective: To ensure the payment of benefits and awards to beneficiaries of departments, state-aided bodies and other specified bodies in terms of various statutes, collective-bargaining agreements and other commitments
Output 2007/08 Target/ Milestone
Payment of military pension benefits
6 468 beneficiaries paid monthly
Payment to service providers for medical expenses
722 claims paid to service providers monthly