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LOBAMBA – It gets gloomier.

This is the state of government’s cash flow position which had reached at least E2.5 billion, in arrears by the end of July 2017.  This terrifying state of financial affairs was revealed by the Minister of Finance, Martin Dlamini, when he presented the Mid-Year Budget Review Report (2017/18) in the House of Assembly yesterday.  Dlamini said the E2.5 billion figure did not include E619 million which government had been operating on a cash flow deficit at the end of the second quarter, which was September 2017. The minister further said the funding gap was projected to increase to E4.5 billion by the end of the financial year, which falls on March 31, 2018. The stunned Members of Parliament (MPs) also heard that the payment arrears accumulated since the beginning of the financial year and were a worrying factor.

“While mindful of the arrears accrued from the previous financial year, we do take note that the funding gap will rise to approximately E4.5 billion by the end of the 2017/18 financial year,” said Dlamini. He was, however, not specific on whether this money was owed to suppliers or others. Dlamini said in this regard, government was working on establishing an Arrears Management Committee that would among other things, develop a strategy for the clearance of such arrears. He said in addition, measures would be put in place to prevent further accumulation of arrears. Sounding like a broken record, the minister said an issue of great concern, however, was the over-reliance on the Southern African Customs Union (SACU) receipts as a revenue source for the budget.

“Despite its volatility, SACU has now become the only reliable source of payment of civil servants salaries,” said Dlamini. He said it was worth mentioning that even with the higher than average SACU receipts for 2017 which stood at E7.1 billion, government was unable to meet the entire wage bill obligations through this source of revenue. “This is troubling for government considering that SACU receipts are only enough to cover 2.5 months of salaries each quarter,” he said. He said it was even more worrying when one considered the excessive variance in SACU receipts in the recent past and the likelihood of lower than average receipts for the coming financial year.

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