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HAS GOVT HELPED NEAL IMPLEMENT HIS BUDGET?

13/02/2020 09:01:00 BY SIBONGILE SUKATI

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MBABANE – All eyes will once again be on Finance Minister Neal Rijkenberg tomorrow as he presents his second budget speech for the 2020/2021 financial year.

Although Rijkenberg is the focal person when it comes to presenting the budget, it should be noted that he does not do this by himself as all government ministries make a contribution in mapping the way forward.

However, to say that the minister has had a tough 2019/2020 financial year would be an understatement as for the past 12 months, government has been singing the same tune of being in a fiscal crisis or facing cash flow challenges.

During his maiden speech last year, the minister stated that the national budget, which stood at E21.83 billion, would be self-funded in that money which would be used was what government would have collected.

The minister addressed many issues which he said would be delivered such as an extra meal for pupils to enjoy in schools, but this was not achieved as there was non-implementation of the project which was supposed to fall under the Ministry of Education and Training.
Meanwhile, the Finance minister was successful in implementing some of the things which the public took as a bitter pill to swallow such as the fuel levy hike and the implementation of the Alcohol and Tobacco Levy.

The minister had also minced no words when he said the cost-of-living adjustment (CoLA) would not be implemented and even though there were numerous protests over it, government did not budge.

Among other things which were supposed to be implemented was the operationalisation of the Ngwenya-Oshoek Boarder Gate to at least operate 24 hours under the ease of doing business.
This was to be implemented by the Ministry of Home Affairs. Although the Minister Princess Lindiwe met with her South African counterpart, progress has been slow.

Another ministry which has not yet implemented one of its projects was that of Health regarding commencement of the construction of the National Referral Hospital, which didn’t take off. In a brief interview yesterday, the minister said it was important to note that most of the information that he had in his speech was from the ministries.

He said the relevant ministries would have more accurate information on implementation.
“You must also keep in mind that all the projects mentioned have been initiated during the year, but not finalised,” Rijkenberg said.
He added that the fact that they were not showing results yet did not mean that nothing had happened.

We take a look at what the minister highlighted in his last budget speech.

E400m govT property SALE
The minister had stated that with the passage of new revenue measures which would increase domestic revenue collection by E900 million. This would include an estimate of E400 million linked to the sale of government assets. However, no government assets were sold which included property of shares. The minister, in previous interviews, explained that disposing of the property was no easy feat.

He had said without improving the nation’s revenue collection, the present economic crisis could not be abated. He said it was imperative that this exercise was taken seriously and supported strongly by every liSwati. He said non-compliance with the country’s tax laws would not be tolerated.

Rijkenberg said this would be addressed through revenue diversification and a broadening of the tax base and would include an increase in consumption taxes, such as an increase in the tax on fuel and the implementation of Value Added Tax on Electricity. While some of the consumption taxes were implemented, government failed to sell its assets to make the projected E400million.
Implementation rate 3/5

E30m farm subsidy

In his speech, the minister said government would continue with the farm input subsidy programme and an allocation of E30 million had been set aside for this. The programme is currently being managed by the National Maize Corporation (NMC). Although the programme is underway, it was a challenge for many farmers as a majority of the government tractors sometimes experience breakdown and sometimes there is no fuel.

The minister said the achievement of increased crop and livestock production addressed the challenge of food insecurity and poverty. High production levels were expected to ensure food self-sufficiency while at the same time facilitating import substitution and export promotion.

Additionally, he said the second phase of LUSIP which seeks to develop approximately 5 200 hectares which will be used for agricultural production under irrigation, has now reaching completion.

The achievement of increased crop and livestock production addresses the challenge of food insecurity and poverty. High production levels are expected to ensure food self-sufficiency while at the same time facilitating import substitution and export promotion. Through the High Value Crops and Horticulture Project, cold storage facilities and pack-houses have been established in strategic locations to facilitate the storage, handling and marketing of high-quality farm produce.
Implementation rate: 4/5

Water, sanitation provision
“Mr. Speaker, in an effort to achieve 100 per cent potable water coverage by the year 2022, government will implement the Manzini Integrated Water Supply and Sanitation Project which covers four Tinkhundla,” said minister had said.

He said the project would cost up to E825 million and was expected to benefit 76 000 people in the four peri-urban and rural areas under the Manzini Region. This project is also already being implemented although the residents have complained about the lack of water during the implementation stage.

He further stated that the Ezulwini Sustainable Water Supply project was in the final stages of implementation and this has already commenced, which is a good thing.

This project is aimed at providing potable water to the rapidly growing Ezulwini and surrounding areas. The construction of the water infrastructure under this project will cost up to E180 million.
Implementation rate: 3.5/5

No new additional meal

The Finance minister had stated that in 2019, Government would introduce an additional meal to improve learners’ concentration and participation as well as to boost their nutritional status while at school.
However, no additional meal was introduced and instead, some schools even ran out of food. This project fell directly under the Ministry of Education and Training.

He further said government had made significant strides in the implementation of state-funded primary education. He said the Primary School Net Enrolment rate stood at about 95 per cent in 2018. He added: “To increase enrolment, reduce absenteeism and enhance children’s nutritional status, government was implementing the School Feeding Programme.

The programme currently covers every public secondary school and 99 per cent of public primary schools. During 2018, the school feeding programme benefitted 241 745 primary school learners and 119 740 secondary school learners. Government has continued to provide FPE and meals.
Implementation rate: 2/5

No Health Referral Hospital
The minister had highlighted the commencement of the construction of the National Referral Hospital, but this did not see the light of day.
The hospital is expected to be constructed at Elangeni. It is expected that the project will commence this coming financial year. However, he did say to improve access to health services government would operationalise four new clinics and complete the construction of Emergency and Referral Complex at Mbabane Government Hospital
He further stated that there would be conducted a System of Health Accounts assessment to generate consistent and comprehensive data on health expenditures in Eswatini.
Meanwhile, in continuing the fight against malaria, he said government would establish a malaria elimination fund with the aim to make Eswatini malaria-free by 2030.
The 2019/20 budget provides E5 million as seed money for the fund in line with the country’s leadership role in the fight against malaria. Although there hasn’t been much noise about it locally, other countries also took up the initiative to set up a similar fund.
Implementation rate: 3/5

Strictly no-CoLA
Although the issue of the cost-of-living adjustment (CoLA) has in a thorn to civil servants, the minister, in his speech made it clear that there would be no allocation made. This is despite the protests made, by the civil servants last year, but government stood its ground. In his speech, the minister said CoLa was the most contentious economic issue in the country and he was compelled to address it.
He said the growing wage bill was placing insurmountable pressure on the budget and government had been under immense strain to pay salaries due to the cash flow crisis.
He said for wages and pensions, expenditure would increase from E8.2 billion in 2018/19 to E8.5 billion in 2019/20, this was despite the current hiring freeze.
“Given the state of the economy, it is not prudent or possible to budget for a cost-of-living-adjustment in 2019/20, as the country simply cannot afford it,” he said.
He appealed to the public service associations (PSAs) and its members to appreciate the current financial strain and to join them in actively addressing these challenges.
Implementation rate: 5/5

Ease of doing business
Rijkenberg had stated that government was committing to certain initiatives in order to boost private sector investment and improve Ease of Doing Business. He said this would be done through improving access to land for business development by reviewing land ownership laws and polices.
He said this would be the implementation of the 24-hour border operations with the Republic of South Africa and unlock the mining sector.
He further said government would operationalise the Sectional Titles Act and review work permit and immigration policies to be investor friendly. However, the above has not happened and if there is any progress, it has been very slow. He said the country would convene investment summits in Eswatini and internationally to present stimulus packages.
Implementation rate : 2.5/5

Debt clearance challenge
“Mr Speaker, allow me to express, on behalf of the Government of the Kingdom of Eswatini, our sincere apologies to all its suppliers and service providers who have been affected by the cash flow crisis in the recent past and commits to using this fully financed budget, a strong strategic plan and an implementing partner to approach the debt markets to raise earmarked financing for an arrears clearance strategy,” the minister had stated last year. Rijkenberg said going forward, they were committed to meeting their obligations in a timely manner.
He said they would not allow any unanticipated financing shortfalls to result in arrears accumulation and would instead re-align the budgetary allocation. The ministry has started this process of paying the suppliers, although he reported that it was discovered that some of them (suppliers) had made fraudulent claims. He requested a six-week extension for the payment.
Implementation rate: 3.5/5

Where is IFMIS?
The minister informed the nation that the Treasury Department was implementing an Integrated Financial Management Information System (IFMIS) to replace the existing Treasury Accounting System. He said this would serve as an effective platform to implement many provisions of the Public Finance Management Act, including implementation of the International Public Sector Accounting standards.
He said government was simultaneously working on a new multi-dimensional Chart of Accounts for configuration in the IFMIS. Better classification of transactions would multiply the reporting capacity of the IFMIS and would provide more comprehensive and detailed reports for better formulation and execution of fiscal policy.
He added that strong public financial management systems and procedures were critical for any government to develop a sound fiscal policy and a credible fiscal consolidation road map.
However, during the sitting of the Public Accounts Committee, the Treasury Department was always hesitant on when the IFMIS system would be implemented.
This was after it was discovered that double payments were sometimes made though the current system and in some instances, payments were inflated. The department said this would happen in the 2020/2021 financial year.
Implementation rate: 3/5

Fuel, Alcohol, Tobacco Levy
“Cabinet has already considered and approved the E1.20 per litre increase in fuel tax that will be effective in the next fuel pricing session,” said Rijkenberg in his speech. The amount implemented was eventually 85 cents. The minister had said through this adjustment, an additional E383 million would be generated. “The new revenue measures where I request the support of the House are; the Finance and Alcohol and Tobacco levy bills that should give us an additional E280 million in 2019/20,” he had submitted. These too were eventually approved and passed by Parliament. “I have also tabled the Savings and Development Bank Amendment that seeks to bring our bank within the tax net, in line with all commercial banks,” he said.
The SRA Act amendment seeks to transfer all Government Revenue offices to the Revenue Authority to efficiently run and curb revenue losses. However, the revenue offices are still not under SRA.
Implementation rate: 4/5

Total = 33/50
66 PER CENT