NATIONAL TREASURY

Presentation to PCOF

of Annual Report 2004/05

19 October 2005

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Presentation Outline

• Highlights of FY05

• Audited financial statements

• Measurable objectives & output targets

• National Treasury Human Resource

Planning

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HIGHLIGHTS OF ACHIEVEMENTS AND

DEVELOPMENTS DURING 2004/05

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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

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• 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 1999 - 2003 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 (26

000 hits on MFMA Treasury website)

Main Highlights National Treasury(2)

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AUDITED FINANCIAL STATEMENTS

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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)

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MEASURABLE OBJECTIVES AND OUTPUTS PER

PROGRAMME

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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

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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

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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.

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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

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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

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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

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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-1992 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

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Prog 8: Fiscal Transfers

• Purpose: meet international and other statutory obligations

• Transfer payments for FY05:Name of Institution R’000

CMA CompensationDBSAWorld Bank GroupHIPCAfDBSARSFFCSecret ServicesFICCommonwealth Fund

250,987--

39,50472,581

4,602,50917,869

2,117,05721,8662,290

TOTAL 7,124,663

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BUDGET vs ACTUAL2004/05

Programme Budget

R’000

Actual

R’000

Saving

R’000

Savings

%

Reasons

for Savings

PMG 1 143,598 89,349 54,249 37.8 Delays in Centurion refurbishments; re-scoping of the document management system project; restructuring of IT and Security Units.

PMG 2 150,864 135,734 15,130 10.0 Difficulty attracting qualified staff.

PMG 3 53,876 26,260 27,616 51.3 Under-spending on SOE Treasury operations and DFI projects

PMG 4 351,730 226,416 125,314 35.6 Internal restructuring; renegotiation of supplier contracts; compensation of employees

PMG 5 65,180 31,902 33,278 51.1 Consultants; lower claims than expected; spent on vacant posts

PMG 7 2,063,966 1,921,319 142,647 6.9 Unpredictable medical expenditure of retirees

PMG 8 7,258,442 7,124,664 133,778 1.8 Retained allocations to the Apex Fund; delays in the purchase of ADB shares.

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NATIONAL TREASURY’S HUMAN RESOURCES

PLANNING

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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

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Employment and Vacancies 31 March 2005

* Includes Minister and Deputy Minister & additional appointments e.g. interns, contract & excess

Programme Number of posts Total posts filled

Vacancy Rate %

Programme 1 192 179 7

Programme 2 325 257 21

Programme 3 80 65 19

Programme 4 209 100 52

Programme 5 67 54 19

Total 873 655* 25

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Thank You