Treasury seeks to establish infrastructure budgeting facility

27 February 2017

As government moves to strengthen its budget execution and improve in-year monitoring, while also bolstering infrastructure development, National Treasury has proposed establishing a new facility to optimise large multiyear infrastructure project roll-outs that require funding, or other State support such as sovereign guarantees.

The first phase of the new budgeting facility for multiyear infrastructure projects beyond the three-year cycle of the prevailing medium-term expenditure framework, is expected to start in 2017, with the establishment of a technical unit and governing board.

The facility is expected to address shortcomings in planning and executing infrastructure projects, particularly relating to life-cycle budgeting, and operations and maintenance costs, and will assist government in building a pipeline of projects that have undergone rigorous technical analysis.

The technical unit will develop government-wide project design and evaluation guidelines that will be issued as a regulation by the National Treasury, with projects to be “rigorously appraised from inception until financial close”.

The reform will ensure that full life-cycle, multiyear budgeting takes place transparently through legislation that will govern funding, implementation and reporting requirements for very large projects.Further, government is working with municipalities to strengthen infrastructure and maintenance budgeting, with the City Infrastructure Delivery and Management System, developed by the National Treasury in collaboration with several cities, set to improve long-term infrastructure planning and asset management.

This is particularly relevant as government works to prioritise spending on water, housing, healthcare, education, social security and other constitutionally-mandated social rights.

Treasury also presented proposals to reduce national departments’ spending on noncore goods and services and had cut the budgets of some of the country’s parastatals.

However, the 2017 Budget makes provisional allocations of about R14.6-billion for several specific programmes that support economic growth and social protection. However, the responsible department or State-owned enterprise will have to make representations for these funds. 

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