Guidelines on cost containment measures announced by the National Treasury for the 2023/24 financial year
Introduction
On
This document provides a guide to accounting officers and accounting authorities on the implementation of the measures outlined in the August letter. Please note that both the August letter as well as these guidelines are advisory and not an instruction in terms of section 76 the Public Finance Management Act (PFMA), 1999. Its status has also been shared with the Auditor-General. For any queries regarding these guidelines, please contact your budget analyst in the relevant
Purpose
The current fiscal challenges originate mainly from an exceptionally large year-to-date decline in government tax revenue collections (estimated at R22bn for the first five months of the year) and tighter financial conditions that have constrained government's borrowing programme. These constraints are exacerbated by the wage agreement for the public service, signed in
The guidelines outlined here are therefore only applicable for the remainder of the 2023/24 financial year and apply to national departments, schedule 3 entities and provinces. While they do not apply to schedule 2 public entities, the executive authorities and accounting authorities of these entities are strongly urged to take these guidelines into account and implement similar measures. These guidelines intend to assist accounting officers and accounting authorities to significantly reduce the pace of expenditure within their portfolios in the current financial year.
Guidelines
1. Recruitment
Following the conclusion of the 2023/24 Public Service Wage negotiations, the National Treasury (NT) wrote to the
To give effect to the NT's letter, the
The intention of the PERSAL and
An executive authority must consult with the Minister for the Public Service and Administration on all changes to the organisational structure affecting all units or posts regarding the creation of units and posts and functional reorganisation within the key programmes.
Before creating a post for any newly defined job, or filling any vacancy, an executive authority must confirm the need for the post to meet the department's objectives, in line with specific criteria as advised by the
An executive authority must submit a motivation, for creating or filling of a post on PERSAL or
A directive in regard of the above, and as referred to in 1.2, will be issued by the Minister for Public Service and Administration to outline further details. This directive, once issued, will be binding upon all departments and government components.
Departments must indicate in their Adjusted Estimates of National Expenditure (AENE) submission the full extent of possible savings in the compensation of employees budget.
2. Travel
These guidelines do not apply to routine one-day travel with no overnight stay and no flights.
Travel arrangements for critical service delivery items, as determined by the relevant accounting officer and accounting authority, are exempt from these guidelines.
Travel arrangements requested or approved by the President or Premier of a provincial government for political officer-bearers are exempt from these guidelines.
Travel required due to a request by
Travel arrangements wholly or partly paid for through external resources (for example, donor-funding or funding provided by interna2onal or foreign institutions) are exempt from these guidelines.
When considering travel requests, the relevant accounting officer or accounting authority should consider alternatives to travel, including the possibility of attending meetings through virtual platforms, or delaying the need for travel, where possible.
When meetings are initiated by a department, government component or schedule 3 public entity and where travel is unavoidable, the relevant accounting officer or accounting authority should arrange these meetings in such a way that a hybrid option is also available as an alternative.
All accounting officers and accounting authorities should submit a pre-planned consolidated travel plans as part of the in-year monitoring (IYM) to the National or Provincial Treasury (where relevant) and the executive authority, on a monthly basis, for monitoring purposes.
3. Conferences, workshops and catering
Meetings, conferences, workshops, and other similar engagements which are wholly or partly funded by external resources (for example, donor-funding or funding provided by international or foreign institutions) are exempt from these guidelines.
Arranging meetings outside of government premises should be avoided.
Where a meeting, conference or workshop is arranged by a department or government component, no catering should be provided, unless approved by the accounting officer.
4. Capital spending
Spending on buildings and other fixed structures
Capital projects for which the procurement process has been completed are exempt from these guidelines.
Capital projects for which a contract award has been recommended by a bid adjudication committee are exempt from these guidelines.
All valid invoices for projects and purchases underway are exempt from these guidelines and must be paid.
Accounting officers and accounting authorities should consider postponing the implementation of capital projects that have not yet commenced until
When deciding on which projects to postpone, accounting officers and accounting authorities must facilitate the delayed implementation and manage any legal risks and ensure that government will not be liable for claims due to any such decision.
Projects that are already underway or projects for which procurement processes have been completed and contract(s) awarded should proceed.
Spending on machinery and equipment on other assets
Accounting officers and accounting authorities are advised to consider postponing the replacement of machinery and equipment until
5. Other considerations
Annual performance plans and report
Institutions are advised to consider the impact of the above measures on their Annual Performance Plan (APP) for the 2023/2024 financial year. To this end, accounting officers and accounting authorities may need to initiate a process to amend their APPs in accordance with the Revised Framework for Strategic Plans and Annual Performance Plans issued by the
In-year adjustments to the APP must be considered and approved by the respective Executive Authorities and explained in the ensuing annual report along with reasons and measures to address any underperformance. These must be in line with any in- year adjustments to the budgets of departments.
Compliance report
The August letter and these guidelines have not been issued as an instruction under the Public Finance Management Act (PFMA), 1999.
Accounting officers and accounting authorities therefore have the flexibility to implement these (and other innovative) measures without attracting irregular expenditure. The inclusion of information on the measures implemented by institutions in the compliance report is encouraged.
Surplus and unspent funds
The implementation of these (and other institution specific) measures should result in a reduction in spending over the next 6 months. The resulting surplus as at
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