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Treasury Prioritises Funding Allocations

The severe impact of the Coronavirus pandemic on the economy has forced the National Treasury to embark on extensive fund allocation manoeuvring, in a bid to soften the blow of the pandemic on the most vulnerable.

This has led to the identification of R500 million for assistance with food relief, among other beneficiaries.

Documents accompanying Finance Minister Tito Mboweni’s Medium-Term Budget Policy (MTBPS) Statement indicate the amount would be added to the provincial equitable share for providing food relief in response to the impact of COVID-19 to mitigate the adverse effects of hunger.

Funds were identified from various sources.

Funds have also been sourced and redirected to the school infrastructure backlog to the value of R475 million. The funds will form part of the completion of projects that are part of the Sanitation Appropriate for Education (SAFE) initiative, which deals with the replacement and removal of inappropriate and unsuitable sanitation, including pit toilets, at schools.

“The funds are for schools in the Eastern Cape, KwaZulu-Natal and Limpopo,” reads the 2020 Medium Term Budget Policy Statement.

The report also details reductions to provincial conditional grants for R10.5 billion for the business rescue plan for South African Airways.

“The reductions are made uniformly across programmes falling within national departments; these include provincial conditional grants. There will be no reductions made to the provincial equitable share for this purpose,” the report reads.

With respect to the reductions to conditional grants, the Treasury said these are made proportionately across provinces “as much as possible”.

Provincial conditional grants are reduced by R1.3 billion. These are made up of R56 million reduced from the national tertiary services grant and R14 million from the community library services grant.

Another R14 million is reduced from the comprehensive agricultural support programme grant while R52 million will be subtracted from the health facility revitalisation grant.

Above this, R224 million is reduced from the HIV, TB, malaria and community outreach grant while R5 million is deducted from the ilima/letsema projects grant.

Exactly R980 000 is reduced from the land care programme grant.

While R4 million is set to be taken from the mass participation and sport development grant, R42 million is lessened from the national health insurance grant.

Just over R26 million is reduced from the statutory human resources, training and development grant. Also, R37 million is reduced from the title deeds restoration grant.

The document further indicates that R336 million is to be taken from the school infrastructure backlogs grant while R240 million is reduced from the national health insurance: indirect grant.

Housing is not spared, with R273 million reduced from the provincial emergency housing grant.

Reduction to the provincial equitable share indicate that R25.3 billion is set to be cut from this.

“This is because reductions were not included in the calculations of the allocations to provincial government at the time the budget was tabled. This is part of the reduction of R160 billion to the growth of the public-service wage bill that was announced in the Budget tabled in February 2020,” the Treasury said.

While provinces are responsible for basic education and health services, roads, housing, social development and agriculture –  municipalities provide basic services such as water, sanitation, electricity reticulation, roads and community services.

“Provincial and municipal governments face multiple pressures over the medium term as government reduces expenditure growth and poor economic performance affects other revenues and funding sources,” said the document.

During the 2021 MTEF period, transfers to provinces and municipalities are growing below inflation or contracting.

Over the medium term, reads the report, government proposes to allocate 48.2 % of available non-interest expenditure to national departments, 42.2 % to provinces and 9.6 % to local government.

“Over this period, national government resources decline at an annual average of 3 %, provincial resources increase by 0.9 % and local government resources increase by 2.1 %,” it reads. – SAnews.gov.za