Battling Limpopo seeks R700m bailout

2011-12-03 15:51

FNB, the Limpopo government’s banker, says it is overdrawn

The Limpopo provincial government is cash strapped and has asked Finance Minister Pravin Gordhan for an urgent multimillion-rand ­bailout or advance.

City Press can reveal today that Premier Cassel Mathale’s administration has failed to pay some civil servants overtime for months and has imposed stringent austerity measures to make up for budget shortfalls after allegedly over-running its operational budget by the second quarter of the 2011/2012 financial year.

Official documents in the possession of City Press showed that in July Limpopo Treasury MEC David ­Masondo instructed all departments to freeze posts and cut by half a list of expenses including overtime, travel, accommodation, printing and telephone calls with immediate effect “as part of budget control”.

Nerulal Ramdharie, the head of the provincial Treasury department, admitted on ­Friday that austerity measures had been­ ­imposed and the ­national Treasury had been approached for funds, but denied ­Limpopo was broke.

“It is not true that the Limpopo Provincial Government is cash strapped or has over-run its budget.

Furthermore, provincial government has not requested any form of bailout from the national Treasury. Yes, we did ­approach the national Treasury to shorten the period of transfer of funds to the provincial accounts,” Ramdharie said.

He added that the province ­requested an advance from the infrastructure budget withheld by the ­national Treasury in the last financial year in order “to accelerate” service delivery.

The denial came after seven independent sources in and outside ­Limpopo told City Press that ­Masondo had requested at least R700 million from Gordhan.

They said President Jacob Zuma and senior government officials were “shocked that Limpopo could spend beyond what it was allocated,” but preferred to leave the matter in Gordhan’s hands until it was ­formally tabled before Cabinet.

Gordhan was to report back to Cabinet at its next meeting on the bailout request.

Senior ANC politicians and ­government officials were divided over whether the province should be granted the loan or refused it.

Gordhan found himself in a tricky situation because FNB, the ­Limpopo government’s official banker, refused to give Limpopo ­departments loans because they had already exceeded their ­overdraft facility.

A government insider said: “It is a difficult situation because, let us say Pravin gives them money now, where are they going to get money to pay salaries for the last quarter of the financial year? It means salaries won’t be paid because banks have ­refused to give departments overdrafts. It is not sustainable. On the other hand, it is an ANC-led government and exposing the matter by not intervening will embarrass the party. Helen Zille is going to celebrate.”

Bulelwa Boqwana, Gordhan’s spokesperson, would not confirm or deny the Limpopo cash problem. “There is nothing I can say now because the minister (Gordhan) is in Durban and needs to clear whatever I say to you.”

Masondo and Gordhan’s departments had held several meetings over the past few weeks in an attempt to find a solution and prevent a potential crisis.

Ramdharie insisted austerity measures had been imposed as a “proactive” step, ­adding the province had “a favourable bank balance”.

But this was contradicted by more than 10 sources who said there was indeed a cash flow problem.

Teacher union Sadtu Limpopo secretary George Mudumela said the provincial education department told the union two weeks ago it would not renew some of the 4 500 temporary teaching posts next year.

A department of education official said hundreds of schools had not yet received their operational costs for the second term, known as norms and standards funds, due in July.

“Schools have no money in their accounts any more and owe a lot of service providers. Exam papers were needed, principals needed ­petrol money to fetch question papers and return them to the circuits. The poor principals used their ­families’ money and will now be paid in arrears,” said the official.

Officials from the health, local government and housing, social ­development, roads and transport departments said non-core services had been “grounded”.

“The way it is now you can’t rule out the possibility that towards ­February and March, the likelihood is that we might not even be paid our salaries. That possibility is there,” one insider said.

Ramdharie maintained salaries would be paid. On Tuesday, he told CFOs of departments that he was going back to National Treasury to source funds.

Norman Mampane, police union Popcru’s ­national spokesperson, said traffic officers were not paid their overtime for working during the Moria Pilgrimage in September.

“In certain instances, they would get uniforms in dribs and drabs. Now this shows there might be­ ­problems.”

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