The affordable education loan option
Since the government placed five Limpopo provincial departments under administration in December, the province’s treasury department has moved from a negative position in November to a R231 million positive balance overall at the end of March.
Before the intervention, the provincial administration had requested an extension of its R1 billion overdraft with the Reserve Bank to R1.7bn.
But the bank terminated this facility and the province was unable to pay its teachers, doctors, nurses and outstanding creditors.
An inter-ministerial team was assembled, led by Finance Minister Pravin Gordhan and comprising the ministers of health, basic education, transport, public works, and public service and administration.
On Wednesday, National Treasury and Public Service and Administration Department officials briefed MPs on the progress made since their interventions.
“The liquidity and solvency crisis is effectively solved,” Treasury deputy director-general for inter-governmental relations Kenneth Brown told the portfolio committee on public service and administration.
He said a properly functioning treasury would have significant spin-offs for other departments.
He said payments to suppliers were “normalising” because the provincial department’s bank balance exceeded the amount of R1.1bn in payments the department still had to settle.
“The (provincial treasury) under-spent its budget by 1.7 percent in 2011/2012, which is an improvement of the 3.8 percent under-expenditure recorded in 2010/2011,” Brown added.
He said a “credible budget” had been tabled at the beginning of March.
“We have finalised recovery. Now we are in the phase of embedding best practice. The next phase will be how we leave.”
The Limpopo Education Department overspent its 2011/2012 budget by 0.4 percent – a significant improvement on the 2.6 percent over-expenditure in 2010/2011, Brown said.
“Combined with the improved cash position, this means the department will not be overwhelmed by outstanding accruals.”
He said all outstanding textbooks would be delivered this month.
Last month, the Pretoria High Court ordered that all textbooks must be delivered by June 15 after Section 27, a Joburg-based law project, took the education department to court to force it to supply textbooks to pupils in the province.
The provincial Roads and Transport Department, which was particularly plagued by corruption, had decreased expenditure, a reflection Brown said, of a focus on improving the quality of spending.
The auditor-general found that in 2010/2011, 86 percent of vacant positions in Limpopo had remained that way for more than 12 months. Further, 14 percent of all appointments made in the province were never advertised.
In 57 percent of cases, performance bonuses were incorrectly calculated, and in 71 percent of cases, provincial government employees had acted in positions for more than 12 months.
DA MP Sarel Marais slammed the government for not intervening in Limpopo and the Eastern Cape sooner.
“These are reactive interventions, not proactive. Why did it escalate for the cabinet to have to intervene?” he said.