Government defends its supplementary budget to parliament |11 October 2019

The Minister for Finance, Trade, Investment and Economic Planning Maurice Loustau-Lalanne and other government officials yesterday appeared before the National Assembly to justify its R310 million supplementary budget request.

To recall, the leader of government business Charles De Commarmond tabled a motion on Wednesday asking for the approval of a supplementary budget of R310.3 million taken from a ‘savings’ of R435.9 million.

It is the first time that a supplementary budget is requested from a budget cut.

Minister Loustau-Lalanne took the opportunity yesterday to reply to some interventions made by the members of the National Assembly (MNAs) on Wednesday.

“There have been discussions stating that the ministry of finance is no longer efficient. I do not feel that way simply because the IMF (International Monetary Fund) comes here two times a year to do a complete review. Every six months we finalise a report and the next would be finalised in Washington next week but we have met our target every time […]” the minister stated.

He noted that aside from its targets to attain a 2.5% surplus and reach 50% debt-to-GDP ratio by 2021, the government is also targeting to not have to bring any supplementary budgets before the National Assembly in the coming years but stressed that this will not happen any time soon.

Minister Loustau-Lalanne further appealed to ministries, government departments and agencies to respect their allocated budgets.

“I appeal to all ministries, departments and agencies to look at their budget every day. If fuel money is running out then find other solutions; you cannot spend more than what you have,” he stressed.

The chief executive of the Agency of Social Protection (ASP), Marcus Simeon, then appeared before the National Assembly alongside the minister to substantiate his request for a total of R63.3 million from the supplementary budget.

The R63.3 million will go to its programmes for home care, disability and welfare assistance.

Minister Loustau-Lalanne noted that the beneficiaries of all these three programmes have increased.

There were a total of 3656 home-carers getting paid through ASP in July 2019; 2912 full-time carers in July 2019 and 744 carers working half-day.

The number of carers that are entering the system will keep on increasing, according to Mr Simeon, since the population is ageing and hence more elder persons will find themselves in need of a carer.

“Hence, ASP in the supplementary budget requested for R30 million [for home carers] but we did not agree to it. Instead they are to be allocated R28 million for the home-carers,” the minister revealed.

Meanwhile 1328 persons were benefitting from the disability benefits in January 2019 but this figure has increased to 1505 in August 2019. For this benefit, ASP has asked for a supplementary of R20 million and the ministry of finance has agreed to give them R20.79 million, which is around R700,000 more.

On the other hand, ASP’s request for a further R15 million to fund their welfare assistance programme was declined and instead the ministry of finance has acquiesced to R10 million.

The National Assembly had initially approved a sum of R40 million for this programme in the 2019 budget.

Some MNAs were skeptical about why the Agency needed a total of R63.3 million in supplementary budget and how was it possible that the ASP had not forecasted these expenses.

Mr Simeon stated that: “ASP does not have control on how many people will benefit or how many carers will come in the system. It is what we call an open-ended system. For instance for welfare, people put in their applications and are put on the programme if they qualify under the measures set by our laws. Meanwhile home-care depends on a medical and a means-testing process […]”

He noted that around 1000 people have moved off welfare but nonetheless that the reforms that ASP are undertaking were not enough to offset the reduced budget it received in 2019.

Also appearing before the National Assembly yesterday was the principal secretary for infrastructure Yves Choppy who had to explain why the supplementary budget is allocating R25.8 million to the Property Management Corporation (PMC).

The R25.8 million will go towards the payments of a loan of R200 million which PMC took from Nouvobanq.

Mr Choppy explained why the loan was taken: “This loan was taken to finance the construction of houses and other projects related to providing people with housing. There was also a loan of R150 million taken from the Pension Fund. Projects that are being financed under these loans include the construction of 409 houses under the project 24/24/24 in districts, and the total cost for these houses is around R468 million.”

“There are also housing projects that were not in the capital budget for 2017/2018, more specifically 100 housing units in Perseverance, 42 transitory housing units at Barbarons and other small housing projects that the government had committed itself to[…] The projects amount to R49 million all together.”

“Other operational costs that we were able to finance through these loans included land that we bought in order to undertake our housing projects. There were R18.2 million that were used to pay for land acquired from Sacos and R1.6 million for other costs such as surveys and clearing of sites. We also financed nine land-bank projects and they amounted to R43.6 million,” he continued.

“So all together these projects make a total sum of R620 million and the two loans we took made up R350 million of this cost; R5 million was from CSR in 2018 and then we covered some of these expenses through some savings that we had in the capital budget of 2017/2018[…]We used around R21 million in 2017 and R15 million in 2019.”

There remains a shortfall of R230 million to complete these projects and Mr Choppy added that they have almost exhausted the R200 million loan.

Principal secretary for finance Damien Thésée explained that the Nouvobanq loan of R200m million was offloaded on the PMC because there were too much pressure on the department of infrastructure and hence the department could not take the financial burden because it would deprive other ministries and agencies.

“What we considered as an innovative and clean measure was to take the loan through PMC which received backing from the government. Then we provided assistance through the development grant and give PMS the money to pay back; this removes pressure from a government department and allows us to make smaller payments,” PS Thésée remarked.

The motion on the supplementary budget will be brought to a vote in the National Assembly’s next sitting on Tuesday, October 15.