Province gains from years of discipline, prudent planning

2013-03-13 00:00

MORE than three years of hard work underpinned by fiscal discipline has helped shield KwaZulu-Natal from major financial hardships — enabling MEC for Finance Ina Cronjé to table an R89,79 billion budget for 2013/14 yesterday.

The departments of Education and Health received the lion’s share, accounting for 73% of the budget.

While KZN has lost R1 billion in 2013/14 due to changing population dynamics and other budget cuts relating to the “equitable share” formula, the province’s “own funds” — built up through a diligent accumulation of savings — have come to the rescue. This has enabled it to fund an array of projects.

The head of the provincial Treasury, Simiso Magagula, told The Witness that this was the toughest budget he had been involved in since joining KZN Treasury in 2005.

“If we did not have these savings it would have made for a miserable budget. The money we have saved will be used to finance other things.

KZN started this process a while back. Despite the reductions, KZN will manage quite well,” he added.

Cronjé said the province was faced with two challenges in arriving at the budget.

“KwaZulu-Natal has been dealt a double whammy.

“It has had its equitable share allocation reduced as a result of updates in the equitable share formula with the latest Census data of 2011, in addition to the … budget cuts,” she said.

The Treasury explained that KZN has had its equitable share allocation reduced after the latest Census data revealed that Gauteng had overtaken KZN as the most populous province.

KZN’s overall spending plans over the medium-term expenditure framework (MTEF) are very different to that of years gone by.

Year-on-year nominal spending growth averaged more than 10% between 2009/10 and 2012/13. However, the growth is set to slow to about five percent between 2013/14 and 2015/16.

“Remember, when the going gets tough, the tough get going. They don’t go shopping,” said Cronjé.

Economist Kwanele Gumbi told The Witness that money was tight across the private and public sectors in the province.

KZN has had a positive cash balance since May 2010. As at February 2013, the province had about R5 billion in the bank, earning interest.

Although overspending has recently been a cause for concern, Cronjé said the Treasury and various departments had made great strides in this regard.

The 2012/13 mid-year projections indicated that the province would overspend by some R1,59 billion, she said, but “this has been managed downward through good fiscal discipline and teamwork to a projected marginal underexpenditure of R13,9 million as at the end of January 2013”.

The province plans to spend R37,4 billion on infrastructure over the medium-term expenditure framework period — mainly on transport, health and education infrastructure.

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