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19 February 2009

MEC for Provincial Treasury, Sa'ad Cachalia presented the budget for the Limpopo Provincial Government for the Medium Term Expenditure Framework. The following are some of the key highlights of the speech.

Global economic overview

Consideration was given to the performance of the global economy and its current and potential impact on South Africa and, particularly, Limpopo. This meltdown has been slowly developing with the global economic growth rate going down from 3,7 percent in 2007 to 2,5 percent in 2008.

This has affected the exchange rate negatively as it resulted in depreciation and the prices of bonds and equities falling. It has also struck at the heart of the financial system as it has led to a decline in the global demand for South African export products. This obviously, continues to have an impact on areas that influence people's livelihood including job creation.

During the speech MEC Sa'ad Cachalia indicated that, "what started off as a subprime crisis amongst Wall Street bankers has degenerated into a swirling tailspin putting world economies on the brink of ruin."

It is the interconnectedness of the global economy that makes it possible for South Africa to feel the global shock. However, for South Africa this has not been to as great an extent as it has been for other countries. The reasonably low levels of public and foreign debt have resulted in a cushion against the maximum impact of this global economic slowdown.

During the 2009 National Budget Speech, Minister Trevor Manuel concisely captures this when he says, "In 1996 public debt was 48 percent of Gross Domestic Products (GDP) and rising. Today, public debt is 23 percent of GDP. Reducing the budget was the right thing to do, and the outcome is that burden of debt service costs has declined and resources have been released to spend on education, health care, housing and infrastructure. This also means that today we are able to respond to the economic downturn, boldly and decisively."

Even under ordinary circumstances government always has resource requirements that are larger than what the fiscus can accommodate.

Achievements

Through the Provincial Growth and Development Strategy (PGDS), there have been collaborative efforts aimed at improving investment in public infrastructure, enhancing the competitiveness of the provincial and local economy, as well as the general improvement in the quality of lives led by citizens.

As reflected from the Budget Speech, the following are some of the achievements made during the 2008/09 financial year:

* The 2008/09 target on households that have access to potable water was 994,798 households or 80 percent of the population. By the end of 2008, 907 753 (84 percent cumulatively) had access to piped water
* By the end of 2008, 620 596 or 84,2 percent households in the province have access to free basic water
* The Department of Water Affairs has completed the water purification works at the Nandoni Dam with bulk line infrastructure at 70 percent complete. The De Hoop Dam currently under construction is at 30 percent complete. Every clinic in the province has access to water and the water quality is being upgraded through reverse osmosis plants. The Independent Electoral Commission (IEC) water for schools programme at voting stations is progressing well.
* By the end of 2008, 564 548 or 45,4 percent of households had access to sanitation.
* At the end of 2008, 957 493 households or 81 percent had access to electricity. While 215 280 households or 29,2 percent had access to free basic electricity
* Statistics South Africa General Household Survey (2007) indicates that 4,4 percent is the overall percentage of households living in informal settlements in Limpopo. This proportion is significantly lower than the national average which is at 15,4 percent
* 78 percent of the clinics in the province operated on a 24 hour basis by the end of 2008. This is an increase from 2007
* Limpopo's HIV and AIDS prevalence rate has reduced from 21,5 percent in 2005 to 20,7 percent in 2006 and 18,5 percent in 2007 respectively.

Budget

Due to challenges that have arisen over the past financial year, it has become necessary to make some tough choices on what programmes needed funding in the 2009/10 MTEF.

A number of factors have contributed to these revisions. These are the effects of the global meltdown (economic crisis), the revision of the provincial equitable share allocation and the public sector wage agreement.

The province, therefore, had to reduce the budget by amounts of R372,1 million, R568,9 million and R870,1 million over the 2009/10, 2010/11 and 2011/12 financial years respectively.

Therefore, the overall provincial budget will stand at R34,5 billion, R38,2 billion and R41,3 billion over the 2009/10, 2010/11 and 2011/12 financial years respectively.

Social sector cluster will gather R26,2 billion or 76 percent of the budget. The economic sector cluster will get R5.9 billion or 17 percent. The governance and administration cluster will get 2,4 billion or 7 percent of the budget.

Vote 1: Office of the Premier
Amount: R559 million

Vote 2: Provincial Legislature
Amount: R123,869 million

Vote 3: Education
Amount: R16 billion

Vote 4: Agriculture
Amount: R1,2 billion

Vote 5: Treasury
Amount: R329 million

Vote 6: Economic Development
Amount: R744 million

Vote 7: Health
Amount: R9 billion

Vote 8: Roads and Transport
Amount: R2,9 billion

Vote 9: Public Works
Amount: R724 million

Vote 10: Safety, Security and Liaison
Amount: R47 million

Vote 11: Local Government and Housing
Amount: R1,4 billion

Vote 12 : Social Development
Amount: R761 million

Vote 13: Sport, Arts and Culture
Amount: R231 million

Conditional grants

The following conditional will continue to receive priority:
* national school nutrition programme
* Comprehensive Agricultural Support Program (CASP)
* national tertiary service
* integrated housing and human settlement development
* public transport operations grant
* Expanded Public Works Programme (EPWP)
* hospital revitalisation grant
* comprehensive HIV and Aids grant
* library services
* integrated housing and human settlement development.

Devolution of property rate fund

During 2008 adjustments budget a number of new conditional grants were introduced in the 2008 MTEF that continue as part of the 2009 budget, namely Ilima/Letsema Projects grant and Agricultural Disaster Management grant under the Agriculture Vote, Overload Control grant under the Transport Vote:

* the Ilima/Letsema projects
* the agricultural disaster management
* the overload control
* health disaster response (cholera)
* public transport operations grant
* Expanded Public Works Programme (EPWP).

2009/10
Equitable share: R29,8 billion
Conditional grants: R4,1 billion
Own revenue: R599,6 million
Total: R34,5 billion

2010/11
Equitable share: R32,5 billion
Conditional grants: R5,1 billion
Own revenue: R596,6 million
Total: R38,2 billion

2011/12
Equitable share: R34,8 billion
Conditional grants: R5,9 billion
Own revenue: R617,9 million
Total: R41,3 billion

Issued by: Office of the Premier, Limpopo Provincial Government
19 February 2009
Source: Office of the Premier, Limpopo Provincial Government (http://www.limpopo.gov.za)