Budgeting arrangements

National Macro Organisation of Government

Anita Viljoen

11 June 2019

Appropriation Bill, 2019

• Appropriation Bill tabled in Parliament on budget day -20 February 2019

• Bill provides for the appropriation of money from the National Revenue Fund in terms of section 213 of the Constitution and section 15 of the PFMA

• Spending is subject to the PFMA and provisions of the Appropriation Bill

• Bill is divided by vote and by main division within a vote (programmes)

• A purpose is set out for each vote and each programme within a vote

• Allocations are divided into:– Current payments

– Transfers and subsidies

– Payments for capital assets

– Payments for financial assets

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Appropriation Bill, 2019 cont.

• Appropriation Bill lapsed on last day of the sitting of theNational Assembly before the national elections

• The Minister of Finance will ask Parliament to revive theAppropriation Bill

• Parliament will be asked to pass the bill as soon as it isfeasible so that the President can assent to it and the Act canbe promulgated before the end of July in line with therequirements of the Money Bills and Related Matters Act, 2009

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Impact of revised cabinet structure on the

Appropriation Bill

• At the end of May, the President announced the appointment of Ministers and Deputy Ministers in terms of sections 91(2) and 93(1) of the Constitution

• Portfolios of these ministers necessitate a reorganisation of departments and votes, including the merging of national departments/ votes, the shifting of functions across departments/ votes, and the subsequent abolishment of some existing departments/ votes

• The National Macro Organisation of Government (NMOG) process put in place by the DPSA to give administrative effect to President’s new cabinet portfolios and administrative structures in support of ministers responsible for such portfolios is however expected to take some time to complete

• To ensure continuity, national departments/ votes that were in existence before June 2019 should continue to exist until such time as the functions of the affected departments that are either spilt or transferred as a whole; are effectively separated and transferred

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Impact of revised cabinet structure on the

Appropriation Bill cont.

• Appropriation Bill tabled at the time of the Budget is based on the government structure that prevailed at that time

• As the NMOG project will take months to complete, the tabling of a new Appropriation Bill with accurate allocations in respect of each change is not practically implementable in the near future

• In the interim, it is proposed that the technical corrections to the Appropriation Bill originally tabled be proposed in terms of section 14 of the Money Bills and Related Matters Act, 2009

• The technical corrections proposed will be based on the proclamation gazetted in terms of the Public Service Act to amend the national departments listed in Schedule 1 to that Act

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Impact of revised cabinet structure on the

Appropriation Bill cont.

• The technical adjustments will create budget votes that reflect the restructured and renamed departments

• This is only a technical correction, as no funding will be allocated to the ‘new’ votes at this stage

• Votes are being created so as to enable funds to be transferred to reorganised departments from existing budget votes, as functions are fully transferred and new departmental structures are properly established

• In terms of Section 33 of the PFMA, as functions are transferred between departments so are the associated funds

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2019 adjustment and 2020 budget processes

• Funds will shift between national departments as soon as processes are complete and approved

• Where the shifting of functions / abolishment of departmental structures have been completely finalised including costing by 26 August 2019, this will be reflected in 2019 Adjustments Budget

• Structures which are finalised by end of year will be able to be appropriately reflected and catered in the 2020 Budget

• Departments will need to submit their budget proposals for the 2020 Budget process in line with the MTEF Budget Guidelines to be issued by the National Treasury. Critical dates and timelines governing the 2020 budget process will be included in the guidelines

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Process for shifting funds across votes

• Done in accordance with section 33 of the PFMA which states that as

functions are transferred so are the associated funds

• Treasury Regulation 6.5.1 stipulates that where a function is to be

transferred between votes the relevant treasury must be consulted in

advance and that in the absence of an agreement between the affected

departments on the amount of funds to be transferred, the relevant treasury

will determine the funds to be shifted

• When the transfer of functions involves a change to the budget structure,

such as where there are changes to programmes or subprogrammes on a

specific vote, a separate submission needs to be made in this regard to the

National Treasury

• In order to facilitate these processes, the relevant National Treasury Public

Finance representatives must form part of the budget and financial

workstream in each of the affected departments

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Process for shifting funds across votes cont.

• Steps to be followed:

– The department relinquishing the functions must submit a formal request

to the National Treasury via their Public Finance representative. The

request should include the following information:

• An explanatory memorandum motivating the functions shift/s

• A copy of the government gazette which depicts the transfer of the

functions between departments

• A copy of the agreement between the transferring department as well

as the recipient department that indicates that the departments are in

agreement with the proposed functions and quantum of funds being

transferred

• The shifting of funds data workbook (including carry through costs for

the MTEF period)

– The National Treasury will then assess the request and make a

determination

– The affected departments will be informed and an allocation letter issued9

Key principles

• All transfers of functions made by 26 August 2019 and reflected in the

adjustments budget are effective retrospectively from the beginning of

the financial year, unless stipulated otherwise in legislation

• Transfers of functions made after the adjustments budget will be

reflected in subsequent budget legislation

• For all transfers of functions, the transferor as well as the recipient

department must be identified

• All associated resources such as staff debt, payables, capital assets,

commitments and accruals, must follow the function transferred to the

recipient department

• Any agency agreements drawn up between the transferor and the

recipient department must set out the roles and responsibilities of each

entity including the accountability arrangements

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Thank-you

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