Tuesday 2020-07-07

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MINISTER NEAL TABLES E24.1BILLION BUDGET

By Bodwa Mbingo | 2020-02-15

Minister of Finance Neal Rijkenberg yesterday tabled an increased E24.1 billion national budget allocation for the 2020/21 financial year with the ministry of education and training once again getting a lion’s share of about E3.2 billion.

The budget for the next financial year, beginning April 1, 2020, is E2.2 billion above the budgeted expenditure for the 2019/20 financial year and shows a 10.6 per cent increase. Deficit, on the other hand, stands at E2.88 billion.

In a speech the minister delivered in exactly one hour, six minutes and 21 seconds, without even a short water break, he asserted that this budget is one designed to improve government’s delivery of services and distribution of resources to all citizens, in particular the vulnerable groups.

He also emphasised that government and the economy cannot live beyond its means year after year. Notably, Minister Rijkenberg explained that the new budget includes an amount of E2.2 billion for public debt payments. Also of note is a budgeted E113m for notching and E227m for a cost-of-living adjustment (CoLA) towards public servants.

The appropriated recurrent expenditure is set to grow by E238 million compared to the 2019/20 financial year, now standing at E16.2 billion. The capital budget allocation is E6.4 billion in 2020/21, which is an increase of 12.4 per cent compared to the 2019/20 financial year. Thus, the total expenditure for financial year 2020/21 is E2.2 billion above the budgeted expenditure for 2019/20, which is a 10.6 per cent increase.

Rijkenberg thanked Their Majesties for the confidence and trust they have placed in him as the custodian of the finance portfolio and, in particular, thanked the King for being a unifying force for the nation and giving government the mandate and direction as articulated in the Speech from the Throne. “His Majesty reminded us that time is of essence in our socio-economic transformation and that, above all else, we must ‘keep moving forward’.

Echoing His Majesty’s speech, there is no time to lose. “In the previous budget cycle, Cabinet outlined a strategy to resuscitate the economy. This led to the launch of the Eswatini Strategic Roadmap 2019-2022 which aims to establish a policy framework that will ensure sustainable economic development, financial stability and growth, ultimately improving the quality of life of the people of Eswatini. This strategy necessitates adjustments in the short to medium term to ensure long term sustainability,” he remarked.

The minister further pronounced government’s commitment to fiscal consolidation by finding ways and means to improve revenue inflows while trying to contain expenditure.

However, he said, fiscal adjustment alone cannot suffice; essential structural reforms in economic policy are integral to the adjustment process. He said the focus of these reforms is on economic growth and stability, hence the need to enable all sectors of the country’s economy to attain a path of high and sustained inclusive growth.

“Even though the focus of this year’s budget continues to be on building a resilient economy through fiscal consolidation, we are starting to see positive signs of growth reflecting a promise of ‘green shoots’. Government has introduced measures to rationalise expenditures and make unavoidable sacrifices to ensure long term growth and fiscal sustainability.

We are rising to this challenge and nurturing the seeds of progress, while ensuring that the preconditions for positive results are created,” the minister added.

Cash flow challenges persist in government

Government continues to face cash flow challenges, causing the country not to meet its financial obligations on time.

Minister of Finance Neal Rijkenberg said this has resulted in the accumulation of significant arrears which has placed a burden on suppliers of goods and services.

He said this time last year, government had accumulated an arrears stock of E4.2 billion.

He said this excluded most arrears on capital projects and what has been referred to as “invoices in the drawers”. “We made it a priority to settle these outstanding payments, and last year, suppliers and service providers were called upon to re-submit these invoices and supporting documents for verification.

The internal audit team and the auditor general’s office are now conducting a verification exercise for these invoices so that the payment process can proceed.

“Mr. Speaker, I am pleased to inform this House that our efforts are showing signs of success as the total amount owed now stands at E2.2bn. This includes the old arrears, the ‘invoices in the drawers’ and all outstanding capital payments.

We acknowledge that while dealing with existing arrears is part of the problem, our efforts will be in vain unless we ensure that this does not happen in the future,” said the minister.

To curtail and discourage any spending happening outside of the budget and to improve overall budget execution, the minister highlighted that government has instituted a new reporting structure whereby each ministry reports on execution to the Planning and Budgeting Committee once every two months.

He commended his fellow Cabinet ministers and their teams for the efforts that have gone into this process and the great improvement that is showing in this year’s budget spending.

“While Eswatini is in a year of improved SACU receipts, we are committed to stay firm on the demanding course of fiscal adjustment we have set for ourselves.

We will continue intensifying our efforts to eliminate our structural inefficiencies.  “We are cognisant of how cyclical buffers in SACU receipts create an illusion which leads to increases in expenditure.

We are committed to using this temporarily larger fiscal head-room to cushion our reserves and meet our payment obligations,” added Rikenberg.

He also disclosed that government is committed to expanding the size and scope of the private sector in Eswatini, pointing out that the Eswatini Strategic Roadmap and the National Development Plan speak volumes to our ambitions in this area.

 

THE BUDGET ESTIMATES FOR 2020/21

 

Revenue and grants                       E21.20 billion

 

Appropriated recurrent expenditure      E16.15 billion

 

Appropriated capital expenditure            E6.38 billion

 

Total expenditure                            E24.08 billion

 

Deficit                                   E2.88 billion

 

 

THE BUDGET AT A GLANCE

 

Education                                            E3.2Bn

 

Health                                   E2.1Bn

 

Defence                                               E1.2Bn

 

Police                                    E1.0Bn

 

Works                                   E765.8m

 

DPM                                      E742.2m

 

Finance                                                E647.0m

 

Correctional                                       E509.6m

 

Labour                                  E448.9m

 

Foreign Affairs                  E436.7m

 

National Treasury                            E428.6m

 

Agriculture                                          E356.7m

 

Tinkhundla                                          E356.2m

 

Public Service                    E286.0m

 

ICT                                          E206.5m

 

CAPITAL PROJECTS

 

E22Bn    Rural electrification phase 26

 

E1.3Bn International Convention Centre and Five-Star Hotel

 

E600m   Manzini – Mbadlane road

 

E745.1m               Lower Usuthu II Extension – DownstreamDevelopment

 

E367.9m               Manzini Golf Course Interchange

 

E222m   Construction of Factory Shells (Kelloggs, Johnson

 

E204m  Nokwane Biotech, Phocweni IT Parks

 

E191.9m               High Value Crops

 

E165m   Micro-projects Infrastructure Development

 

E160m   Rehabilitation, construction and maintenance of                                               State Houses

 

E155.2m               Ezulwini Water Supply and Sewer

 

E150m   E-Government upgrading

 

E123.7m               Construction of Lukhula – Big Bend Road

 

E122.5m               Manzini region water and sanitation

 

E120m   Rehabilitation and maintenance of feeder roads

 

E119m   Probase Projects

 

E83.8m Mkhondvo-Ngwavuma Dam

 

E83.7m Water Harvesting, small and medium dams

 

E80m     Nhlangano – Sicunusa Road

 

E80m     Rehabilitation of Mbabane Govt Hospital

 

E69.5m Link Roads (Lozitha, Ludzidzini, Mlilwane)

 

E60m     Completion of Buhleni Police Station

 

E57m     Construction of National Referral Hospital

 

E50m     Replacement of army barracks

 

E50m     Rehabilitation of Correctional Facilities

 

E41m     Shiselweni Electrification Project

 

E40m     Nhlangano Water Supply and Sewer

 

E30.9m Livestock Development Project

 

E30m     Rural Water Supply

 

E22m     Feasibility study for Nondvo Dam

 

E20m     Procurement of diplomats residences (Ethiopia,                                               Mozambique)

 

E19.3m Rehabilitation of government buildings

 

E15m     Construction of Mankayane Home for the Elderly

 

E14.3m Expansion of Matsapha Inland Dry Port

 

E10.8m                 Rehabilitation of National Parks (Malolotja, Mantenga                   and Mlawula)

 

E10m     Design and construction of new parliament building 

 

E10m     Phuzumoya Strategic Oil Reserve

 

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