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Hon Speaker
Hon Premier
Hon MECs
Hon Members

The draft IGFR has some interesting things to say about the performance of provinces. It argues "the healthy state of provincial finances has put the sphere in a good position to play a key role in service delivery. Despite this success, a number of challenges remain. HIV/AIDS, infrastructure backlogs, early childhood development, improving the quality of school education and health services and improving access to social security grants continue to be the areas of focus".

It goes on to say "With healthy finances, provinces are now in strong position to give expression to Government's aim of addressing poverty and reducing vulnerability and inequality. Implementation of the Public Finance Management Act (PFMA) has contributed to the stable finances of provinces and improved financial management. Overall performance reflects the positive impact of continued institutional reforms, development of management capacity and the integration of planning among the three spheres of government. This allows for accelerating service delivery and focusing on its quality.

Hon Speaker, the funds come from two sources: -
(a) Provincial Revenue Fund and
(b) National Revenue Fund

The funds that come from the Provincial Revenue Fund are reflection of the healthy finances of this province. The improvements in the financial management have assisted us to deal with some of the cost pressures that have emerged during the course of the current financial year.

The national government has made provision for:-

* The inflationary impact of the rand depreciation e.g. health equipment and medicines
* The higher than budgeted for salary increases

Other unavoidable and unforeseen cost pressures the main areas of focus in this adjustment are the following:
* Coega Development Corporation - R298m to fast track infrastructure delivery to deal with Pechiney effect
* Health - In the main budget, we indicated that we will deal with 2% underfunding of the health department during the course of the year. R644m including conditional grants has been allocated for this purpose.
* The amount including the R122m for professional staff
* R87m to increase the social security grants in order to cover inflationary
* Impact of food price increases.
* We intend repairing bridges, roads and schools affected by various disasters across the province. R10m to do the preliminary work has been made available to the Department of Roads and Public Works
* The Premier has commissioned the development of what is called the Rapid Impact Programme focussing on rural areas. It is based on two platforms namely Infrastructure and Agriculture. R5m has been made available to do the costing and develop implementation mechanisms.

Hon Speaker, there are still a lot of challenges ahead. Overall Provincial Financial Management Performance has improved. We need to get to a stage where we ensure unqualified reports. Tremendous improvement has been recorded across all departments. For example in 2000/01 financial year there were eight (8) departments with disclaimer of opinion by the Auditor General. In 2001/02 there are four (4) departments with disclaimer of opinion. The remaining eight (8) departments received qualified opinions and that happened only in certain areas not a complete qualification.

The absorptive capacity within departments is improving. For example, as at the end of October, departments are reflecting an overall projected overspending of R90m. As opposed to a projected underspending of R860m for the same period last year. However there is a serious exposure in the Department of Education of about R595m overspending due to unfunded posts advertised in January and June 2002.

We are seriously looking at alternative means of service delivery, in particular in areas such as infrastructure and the rapid impact programme.

I thank you

Source: Eastern Cape Provincial Government (http://www.ecprov.gov.za)