Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1694846604702.pdf (South Africa)
Outline • Introduction • Global and economic outlook • DORA in context • Budget trends in real terms • Division of Revenue • Underspending of government budget • Summary 27 March 2023 2 Introduction • The Parliamentary Budget Office (PBO) is a juristic entity of Parliament and headed by a Director as an Accounting Officer.
The Office was established in terms of the Money Bills and Related Matters Act 2009 as amended in 2018 • To support the implementation of the Money Bills and Related Matters Act of 2009; in particular support to Finance and Appropriations Committees in both Houses; but other Committees and Members of Parliament subject to available capacity • The Money Bills and Related Matters Act guides the approval of money bills an related matters, including amending the budget • The Office offers independent and objective analysis and advice to Parliament on money bills and other bills presented by the Executive; and any other documentation or reports with fiscal implications • The purpose of this presentation is to given overview of PBO role in support of oversight process and share the Office recent research and analysis at the 2023 Joint Chairs of Chairs workshop 27 March 2023 3 Research and Analysis Requests Workflow Process 27 March 2023 4 Research and Analysis Pre-Budget and Pre-MTBPS briefs Description of the Research and Analysis Provide analysis to Parliament on the status of the economy and public finance and government performance before the presentation of the National Budget (February) and Medium Term Budge Policy State ( October) Budget and MTBPS analysis, Fiscal Framework, Division of Revenue and Appropriations Bill Subsequent to the presentation by the Minister of Finance and before Parliament adopts or amend or reject the budget and MTBPS proposals, the PBO provides analysis on economic and fiscal issues to be take into account Policy Analysis on National Development Plan (MTSF)- Policy Briefs Several analysis on the implementation of the National Development Plan, vision 2030 (2019-2024 MTSF) in terms of content, context and progress made with the implementation Quarterly Economic and Fiscal Briefs Quarterly Economic Brief, the PBO provide parliament with an analysis of the economic outlook as the economic performance affects public finances outlook.
Fiscal Brief appraise MPs on the status of the of government’s performance in relation to the budget allocated, and these updates are given within six months (pre-MTBPS) of the financial year and just after the end of a financial year In-year revenue forecast and Forecast Audits on government forecasts Advanced internal economic modeling capability In-year revenue forecast, within the first six months of the financial year, PBO provides an estimate of whether government revenue targets for that year will be realised.
The PBO estimates are based on historic trends and including first five months of the year’s outcomes being forecasted.

Forecast Audits, annually provide an analysis of the government growth estimates.
This analysis gives indications of the likelihood of realising forecasted growth given historic performance of the forecasts Briefs on Taxation and Revenue Matters On request from finance committees, PBO provides an analysis of taxation proposals made during the budget reviews Sector specific research and analysis requests from Committees Costing Estimate Analysis 27 March 2023 During the financial year Committees may request an analysis on a particular issue with public finance implication.
E.g., Votes budget analysis, SOEs financial analysis, Electricity generation technology choices: Costs and considerations, Public Sector Wage Bill, Free Fee HE Costing Analysis, Business incentives for development, Underspending of budget Traditional costing models have largely focused on the fiscal implications of the policy and have not sufficiently accounted for the macroeconomic, socioeconomic and environmental effects of policy.
The Office costing model proposes a framework in which fiscal implications are considered in tandem with macroeconomic effects, socioeconomic implications and environmental considerations 5 Quarter Economic Brief Macroeconomic outlook Global and local economic performance 27 March 2023 6 Global economic performance Global, developing countries and South African real economic growth (percentage) s e g a n e c t r e P 6 4 2 0 6.7% 5.8% 4.9% Source: UNDESA 2021 World Developing countries South Africa 3.9% 3.0% 2022 2.0% 1.9% 1.5% 2.7% 3.9% 2023 4.1% 2024 1.8% • Global growth forecasts have improved in early 2023, however there is much uncertainty related to Estimate Projections Projections Actual (amongst others): • Positive impacts of China reopening, recovery in value chains and freight transport, and lower inflation • Negative impact of higher interest rates, environmental risks, war in Ukraine and other geopolitical risks • According to the 2023 Global Risk Report of the World Economic Forum: • Present and future risks can interact with each other to form a ‘polycrisis’ – a cluster of related global risks with compounding effects, such that the overall impact exceeds the sum of each part • Examples are: energy supply crisis, food supply crisis, inflation crisis and cost of living crisis • Developing countries, incl.
South Africa, have been affected by the cumulative effects of crises.
The high likelihood of more crises points to greater hardships ahead • In 2023 the UN Secretary General advocated for developing country governments to embark on “bold, targeted and timely” fiscal expansion and support from developed countries to support their recovery and stimulus • Even if global growth improves more than the forecast, South Africa’s growth prospects over the medium term remain poor because serious risks, including electricity and water availability, will very likely persist and because government’s fiscal policy framework is contractionary 27 March 2023 • The IMF on 22 March 2023 adjusted their expected GDP growth for SA to be only 0.1 per cent in 2023 7 Global financial instability add to risks • The increases in interest rates in the US and Europe since 2022 have caused money to flow out of developing countries and increased hardship around the world • In early March 2023 the US Fed announced that they would continue to increase interest rates over a longer period • The response in US bond markets was increased trade in bonds, which resulted in the yield on US Treasury Bonds increasing to over 5 per cent - the highest since 2007 • When bond yields rise the price of bonds fall • US Bond yields rose because traders expect rising interest rates to trigger a recession • The US Fed seemed to have failed to take into account the impact of their interest rate increases on the levels of risk in the US banking system • Rising interest rates and bond yields led to a run on Silicon Valley Bank (SVB), the 16th largest US bank (based on assets on 31 Dec. 2022) that forced it to close on 10 March • Rising bond yields reduced the value of the bonds held by SBV below the value of the deposits in the bank • The run on the bank was by the nearly 90 per cent of SBV depositors who had deposits larger than the US$250 000 limit covered by the Federal Deposit Insurance Agency • A large number of these depositors held money in SBV to be able to pay their workers • It was the second largest bank failure in the history of the USA and the largest since the global financial crisis of 2008.
The next day Signature Bank had a run and was closed 27 March 2023 • More uncertainty of higher interest rates and financial instability increases global risks 8 South African economic performance: Divergent economic performance across sectors Production-side: value added to by sector GDP Demand-side: expenditure contributions to GDP 0 0 1 = l e v e l 4 Q 9 1 0 2 140 120 100 80 60 40 0 0 1 = l e v e l 4 Q 9 1 0 2 120 100 80 60 2022Q4 investment was 7.2% below the level before the Covid- 19 pandemic Agriculture Manufacturing Trade Mining Construction Finance Source: Stats SA Consumer spending Exports Gross fixed capital formation Government spending GDP Source: Stats SA • The GDP growth rate for 2022 was 2 per cent compared to the rebound growth of 4.9 per cent achieved in 2021after the large Covid-19 induced recession during 2020 • Economic activity in 2022 was again constrained by fiscal consolidation, higher interest rates, the war in Ukraine, KZN floods, bottlenecks at Transnet’s ports and lower global demand and growth • Following the 1.3 per cent GDP decline in the fourth quarter of 2022, the level of real GDP dipped back to below the pre-COVID level (fourth quarter of 2019) • Except for agriculture and finance, all other sectors remained below pre-pandemic levels in 4Q2022 • In terms of expenditure on GDP (demand-side), gross fixed capital formation rose by 4.7 per cent in 2022.
Investment by private businesses grew by 7.3 per cent while capital expenditure by public corporations declined by 3.6 per cent 27 March 2023 • Even after the growth in 2022, fixed investment remains 7.2 per cent below pre-pandemic levels 9 s e g a n e c t r e P 90 80 70 60 50 40 30 20 10 0 Employment– jobs lost/gained per sector Unemployment rate (%) Change in employment since the pandemic ('000s) 4Q2022 vs 4Q2019 71 61 43 33 Total (formal & informal) Agriculture Mining Manufacturing Utilities Construction Trade Transport Finance Community & social services Official Expanded Offical (15-24) Expanded (15-24) Source: Stats SA Private households -317 -25 7 -64 4 -141 48 -29 -84 -65 -144 Source: Stats SA QLFS • The official unemployment rate was 32.7 per cent in the 4th quarter of 2022 • A total of 317 000 formal and informal jobs were lost between 2019Q4 and 2022Q4 • Only mining, trade and utilities sectors fully recovered jobs lost during the pandemic • The construction and private households sectors shed the most jobs • Age and gender disparities persist labour market with the unemployment rate of the youth (15-24 years) and females at 61 per cent and 46.6 per cent respectively – higher than the national average rate of 34.5 per cent in South Africa’s 10 27 March 2023 The current account, bond yields & inflation Balance of the current account (as a percentage of GDP) • South Africa’s current account was in deficit by R174 billion (2.6 per cent of GDP) during the Q4 of 2022 • The current account had a small surplus of R3.1 billion in the Q3 2022 • The Q4 2022 deficit was not caused by the trade balance which was small but positive • It was driven by net financial transfers on the current account, which have been negative over the past 2 decades • The yield on SA’s 10-year bond increased throughout much
 of 2022 and remained relatively high in early 2023 because of interest rate increases in developed countries in response to rising inflation • Higher interest rates in developed countries often trigger capital outflows from developing countries • Higher SA bond yields during 2022 may also have been caused by depreciation of the rand • Headline consumer inflation (CPI) at a more-than-decade high of 6.9 per cent in 2022 and 7 per cent in Feb. 2023 • The largest contributors to higher inflation were transport and food prices due to the war in Ukraine, continued supply chain disruptions, higher crude oil prices and profiteering by large corporations • Inflationary pressures may be due to corporations passing on costs of load-shedding to consumers • An important strategy to kick start growth in the face of a cost of living crisis is to build household resilience by fiscal expansion through increasing services, grants and infrastructure investment • Increased social support and infrastructure investment should boost aggregate demand & growth 11 27 March 2023 South Africa’s Greylisting in February 2023 •On 24 February 2023, South Africa was greylisted by the Financial Action Task Force (FATF).
Being on the greylist means that South Africa is “under increased monitoring” as it actively works with the FATF to address its strategic deficiencies in its regime •The extent to which the greylisting will mainstream analysis suggests that negative implications for the country impact South Africa is unknown.
The the greylisting will have significant and •Large negative impacts on economic growth in the medium to long term would exacerbate the high unemployment, poverty and inequality •However, the FAFT decision to greylist South Africa was anticipated by the markets, which means that markets may have already adjusted risk assessments of South Africa prior to the rating •The calls for financial sector reform are not new in South Africa.
For years, organisations such as the Alternative Information and Development Centre, and others, have called for the government to prioritise the tackling of illicit financial flows (IFFs) •Since the risk of greylisting, Parliament passed two laws to FAFT recommendations.

The SARB has indicated that it plans to monitor its financial jurisdiction with a more risk-based approach.
The government has actively 12 engaged in measures to curb money laundering and other illicit transactions 27 March 2023 2023 DORA in Context National Situational Analysis Provincial Situational Analysis Local Situational Analysis 27 March 2023 13 National sphere of government: Social protection • Large proportions of Average food basket against the National Minimum wage and social grants the South African population are subject to debilitating poverty and unemployment and institutional support is inadequate • President Cyril Ramaphosa: “African women are the face of poverty” – • The percentage of households that had limited access to food has increased from 17.8 per cent in 2019 to 20.9 per cent in 2021 • The percentage of persons with more limited access to food increased from 19.5 per cent in 2019 to 23.8 per cent in 2021 • The extensions to the COVID-19 SRD grant have provided lifelines to millions of South Africans • As of December 2022 the DSD had spent 48.2 per cent of the 2022 Budget • The new eligibility criteria for qualifying for the grant has led to the exclusion of millions of needy people who fall below the upper- bound poverty line • More than R9 billion of the estimated expenditure were not spent in 2022/23 R6,000.00 R5,000.00 R4,000.00 R3,000.00 R2,000.00 R1,000.00 R0.00 ) r h / 9 1 , 3 2 R ( - D V O C 5 7 r e v O e g A d O l ) h / 7 8 , 0 2 R t a n o i t p m e x e % 0 1 ( e g a W m u m n M i i l a n o i t Source: PMBEJD January Index, Budget 2023 14 27 March 2023 National sphere of government: Justice & Protection Services • The increases in crime reported in crime statistics is worrying • On average, crime increased by 9.55 per cent (year-on-year) between December 2021 and December 2022 • In 2022/23, the biggest crime category increases shoplifting were
 attempted murder (23.3%) and common robbery (21.2%) (24.3%), • Police Minister Bheki Cele has previously the high levels of expressed concern about gender-based violence in the country • In 2020/21 there was one police officer – excluding administrative staff – for every 408 people • Budget 2023: • Increased the Police budget by R7.8 billion to make provision for 5 000 police trainees each year over the next 3 years • The Budget is silent on funding to implement the National Strategic Plan on GBVF (NSP on GBVF) SA crime statistiques: Q3 2021/22 vs Q3 2022/23 2021/22 vs 2022/23 Oct-Dec 2021 Oct-Dec 2022 Y-on-Y Change Contact Crimes 164 953 184 020 11.6% Contact-related Crimes 31 621 32 187 1.8% Property-related Crimes 91 450 98 004 7.2% Other Serious Crimes Crime detected as a result of police action 101 820 112 580 10.6% 54 608 60 169 10.2% Total Source: 2022 Quarter 3 Crime statistics 444 452 486 960 9.6% 15 27 March 2023 Provincial sphere of government: Education • According to Stats SA, there was a decline from 36.8 per cent in 2019 to 28.5 per cent in 2021 in children aged 0 to 4 who attended Grade R and pre-school • Children from poorer households are more likely to stay at home with parents or guardians than attend ECD centers • New data published by Oxford University Press on early grade reading in South Africa report that fewer than 50 per cent of Grade 1 children learn the letters of the alphabet by the end of Grade 1 • Progress in International Reading Literacy Study (PIRLS) estimates that the number of read for Grade 4 children that cannot meaning will increase from 78 per cent pre- pandemic (2016) to an estimated 82 per cent in 2021 (final results to be published in May 2023) t e g a n e c e P r Child care arrangements for children aged 0 to 4 by income quintile 71.5 62.3 60.3 54 32.1 42.7 34.7 23.1 18.1 21.4 1 2 3 Income quintile 4 5 Grade R, Pre-school, nursery school, creche, edu-care centre At home with parent or guardian Source: GHS 2021 27 March
 2023 16 Provincial sphere of government: Education • The percentage of individuals aged 18 to 24 who are still attending secondary school was higher for households in poorer income groups than households in higher income groups • 22.5 per cent of females and 15.5 per cent of males between the ages of 7 and 18 state that they are not attending an educational institution because they do not have money for fees • Youth aged 18 to 24 from the highest income households are more likely to attend university than those in lower quintile groups • Of the 7.8 million unemployed individuals in Q4 2022, 40,1 per cent had education levels below matric, 34.4 per cent had a matric, 10,6 per cent were graduates and 21 per cent had other tertiary 27 March 2023 17 Provincial sphere of government: Health • The public healthcare system remains overstretched and underfunded • For example: According to the South African Nursing Council, the current nurse- to-patient ratio is 1:218 patients while the ideal ratio is 1:16 • In March 2022, Health Minister Joe Phaahla revealed that there were 10 831 vacancies in state hospitals citing budget cuts as a significant challenge • The Minister also highlighted that the doctor-to-patient ratio was 0.79 doctors per 1000 patients in 2019 • Primary Health Care (PHC) has deteriorated • The preliminary outcome for the number of public health facilities that qualified as ‘ideal clinics’ of 1 928 in 2021/22 was lower than the 2 035 clinics that achieved an ideal clinic status in 2019/20 • 22.1 deaths per 1 000 live births in 2019 • 24.1 deaths per 1 000 live births 2021 The Infant Mortality Rate (IMR) • 28.5 deaths per 1 000 live births in 2019 • 30.8 deaths per 1 000 live births in 2021 The under-5 mortality rate (U5MR): • Overweight worsened to 11.5 per cent Burden of malnutrition 1994 - 2017 • Wasting rate worsened to 3.4 per centSource: Stats SA 27 March 2023 18 Local government: Situation analysis • The Non-financial Census of Municipalities (NFCS)
 2022 reports that fewer consumer units received free basic services in 2019 than 2018: Free basic service Water Sewerage and sanitation Electricity Decline in consumer units 1 000 000 645 866 132 303 • Millions of households that are eligible for free services do not get them due to a dysfunctional registration of system for indigent households • Therefore, millions of households are forced to choose between feeding their children and paying for municipal services • According to research by the Public Affairs Research Institute: • LGs have been unable to fulfil the conflicting financial viability through self objectives of financing and service delivery • Their efficacy and financial viability has suffered because of these conflicting goals Percentage of households receiving free basic services in 2018 versus 2019 35 30 25 20 15 10 5 0 t n e c r e P Water Electricity Solid waste Sewage and sanitation % share of free basic services in 2018 % share of free basic services in 2019 Source: Stats SA 27 March 2023 19 The social wage and actual access to services Service Households funded for the free service (2019/20) Households receiving the free service (2019) Difference (funded – actual recipients Total value of difference (R’billions) Electricity Water Sanitation Refuse TOTAL R8.63 R12.86 R10.42 R8.27 R40.18 Source: Tracy Ledger (2021) Access to Basic Services, PARI Working Paper • One cannot talk about access to important services, such as electricity and water, without taking into account both availability and affordability • Estimates are that as much as 80 per cent of South Africans cannot afford services like electricity and water • According to the South African Reserve Bank, there were huge increases in municipal services costs from 2010 to 2020: • Rates and taxes increased by 118 per cent • Electricity tariffs increased by 177 per cent
 • Water tariffs increased by 213 per cent • Free utilities available to households are insufficient to meet basic needs • An average household needs around 200 kWh of electricity – the free quota is 50 kWh.
• The 10 Kl of free water is only around two-thirds of what is required • Millions of households that are eligible for free services do not get them due to a dysfunctional system for the registration of indigent household 27 March 2023 20 The social wage and actual access to services • The National Development Plan 2030 aims to eliminate poverty and reduce inequality by 2030.
According to the NDP: • “Part of our approach to social protection is through a social wage, which includes no-fee schools, free basic services and subsidised public transport” (p.43) • “To promote sustainable livelihoods, irrespective of income, can access services” (p. 31) is important it that individuals or families, • One of SA’s nine primary challenges is “public services are uneven and often of poor quality” and adds that “Citizens have the right to expect government to deliver certain basic services” (p.15, Exec.
Summary) • The 2023 Budget Review claims that, even though, framework the social wage is protected it follows a fiscal consolidation • It reports that 51 per cent of the Budget over the MTEF will be on the social wage • However, the level of spending on the social wage for the entire country seems to have been quite inadequate during the past and also in this 2023 Budget because: • Unemployment poverty and inequality has increased since the NDP was published • Continued backlogs and “uneven and poor quality” of services remain primary challenges • The problem has not been “incrementalism” in budgets as claimed by the NT but that budgets provisions over many years have been insufficient for government to operate 27 March 2023 properly 21 Budget trends in real terms Real per capita spending per function group Education Health Grants 27 March 2023 22 Real per capita spending per function group • Total real per capita expenditure declines in the medium term • Only expenditure on economic development and community development increase marginally in real terms • In 2016/17 total real expenditure per capita was R23 116, by 2025/26 this will decline to R22 747 • In 2023/24, total real per capita spend is R23 402, a decline from the projected R24 255 in 2022/23 Real per capita expenditure (2016=100) 30000 25000 20000 s d n a R 15000 10000 5000 0 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Learning and culture Source: PBO calculations using Budget 2023 data General Public Services Social Development Peace and security 27 March 2023 Years Community Development Economic Development Health Payments for financial assets 23 Real per capita spending in health • Expenditure has declined after the increases during 2020/21 and 2021/22 • Total real per capita expenditure on health declines in the medium term • In 2016/17 total real expenditure per capita was R3 133, in 2025/26 it is estimated to be R3 151 • The estimated decline over the MTEF means that the government will on average be spending less per person R243 (8%) less in 2025/26 than it spent in 2019/20 • Reductions in health expenditure are likely to be more pronounced, given that medical inflation tends to be higher than CPI Real per capita health function expenditure (2016=100) s d n a R 3700 3600 3500 3400 3300 3200 3100 3000 2900 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Years 27 March 2023 Source: PBO calculations based on National Treasury and Stats SA population data 24 Real per capita spending in education • Total real per capita expenditure on basic education declines in the medium term • In real per capita terms, government will be spending less per student in 2025/26 than it did in 2016/17 • In 2016/17, government spent R16 772 per learner.
Projected spend per learner in 2025/26 is R 16 471 (an increase from the R16 384 in the MTBPS) • In the 2021 Budget, NT acknowledged that budget reductions would disproportionately impact no fee-paying schools.
The impacts of this budget should be queried Real per capita expenditure on basic education (2016=10) s d n a R 18000 17500 17000 16500 16000 15500 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 27 March 2023 Years 2025/26 25 Source: PBO calculations based on National Treasury and Stats SA population data Social Grants levels in real terms • In 2023/24, social grants levels increase by 5 per cent on average, however these increases are inadequate given that food price inflation was recorded at 13.4 per cent in January 2023 - the highest recorded since April 2009 • The majority of grants fall above the upper-bound poverty line, except the foster care and child support grants • According to PMBEJD, the Child Support Grant of R480 is 28 per cent below the Food Poverty Line of R663, and 43 per cent below the average cost to feed a child a basic nutritious diet (R843,47) • Treasury estimates a 9.7 per cent decline in beneficiary numbers over the medium term, 7.5 per cent of which will be foster care grant beneficiaries Grant levels (2016=100) s d n a R 1800 1600 1400 1200 1000 800 600 400 200 0 Old Age Old Age Over 75 War Veterans Disability Years Foster Care Care Dependency Child Support 27 March 2023 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 26 Source: PBO calculations based on National Treasury and Stats SA population data The COVID-19 SRD grant • Since its introduction in 2020, the COVID-19 SRD grant has not been adjusted for inflation • In 2023 the grant will be worth R300 (R289 when deflated by GDP) • Budget 2023 estimates the number of beneficiaries for 2023/24 to be 8.5 million • Approvals for the grant remain low and payments continue to be delayed • More than 13 million people applied for the grant in January 2023 • Since April 2022 and January 2023, DSD has approved between 5 and 7.8 million recipients each month • The approval rates have been low and payments have been delayed • The exclusion criteria mean that between 3.1 and 5.9 million people in the target
 group (of 10.9 million) identified by DSD in February 2022 are not receiving the grant s d n a R 360 350 340 330 320 310 300 290 280 270 Value of the COVID-19 SRD in real terms (2020=100) 2020/21 2021/22 2022/23 2023/24 Years Source: PBO calculations based on National Treasury and Stats SA population data 27 27 March 2023 2023 Division of Revenue Bill National Provincial Local 27 March 2023 28 Changing shares of Division of Revenue from 2008/09 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 49.7% 42.4% 48.9% 42.2% 7.8% 8.8% 48.3% 41.6% 10.1% National departments Provinces Local government 27 March 2023 Source: National Treasury 29 2022 Division of Revenue – real per capita s d n a R 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Source: National Treasury, Stats SA, UN.
PBO own calculations National departments Local government Provinces Main budget expenditure Growth in real per capita expenditure 2008/09 - 2022/23 2022/23 - 2025/26 National depts.

Provinces Local government Debt service costs Main budget ex.
1.5% 1.1% 2.2% 1.4% 2,0% -3.6% -2.3% 1.0% 2.8% -1.7% 30 27 March 2023 Conditional Grants to Provinces • Most of the CG increase in 2023/24 since the revised estimates in 2022/23 District • The health programme grant decreases by R2 157 million • The National tertiary services grant decreases by R282 million infrastructure increases by R1 372 • Education grant million • Human Development R688 million Settlement increases by • Provincial Roads Maintenance increases by R3 202 million 31 27 March 2023 R million2021/222022/232023/242024/252025/26Revised estimateRevised estimateDirect conditional grantsDifferenceComprehensive agricultural support programme 1 558 1 599 1 626 27 1 777 1 825 Ilima/Letsema projects 597 610 620 10 648 677 Land care programme grant: poverty relief and infrastructure development85 86 1 90 94 Early childhood development grant1 193 1 242 50 1 885 2 341 Education infrastructure11 689 12 501 13 872 1 372 13 845 14 438 HIV and AIDS (life skills education) grant242 242 -1253 264 Learners with profoundintellectual disabilities grant256 260 5 272 284 Maths, science and technology grant425 433 8 453 473 National school nutrition programme 8 115 8 508 9 279 771 9 778 10 293 Provincial disaster response grant97 146 49 152 159 District health programmes grant27 753 29 023 26 866 -2 15728 072 29 330 Health facility revitalisation 6 435 6 780 7 120 340 7 361 7 691 Human resources and training grant4 298 5 449 5 479 30 5 367 5 607 National health insurance grant694 695 1 717 749 National tertiary services 13 708 14 306 14 024 -28214 654 15 310 Human settlements development13 403 14 256 14 944 688 15 118 15 796 Informal settlements upgrading partnership3 890 4 121 4 303 182 4 496 4 697 Provincial emergency housing grant796 – -796– – Mass participation and sport development grant 604 604 0 631 659 Expanded public works programme integrated grant for provinces433 435 2 454 475 Social sector expanded public works programme incentive grant for provinces 425 426 2 446 466 Community library services 1 573 1 571
 -21 641 1 715 Provincial roads maintenance 12 665 15 867 3 202 17 117 18 976 Public transport operations 7 090 7 403 313 7 735 8 082 Other direct grants4 363 Total direct conditional grants116 361 123 730 127 544 3 814 132 963 140 402 Indirect transfers3 954 4 612 4 178 -4344 447 4 763 School infrastructure backlogs 2 397 2 403 2 079 -3242 172 2 269 National health insurance indirect1 557 2 209 2 099 -1102 275 2 494 Source: National TreasuryMedium-term estimates Provincial Equitable Share • Total average annual MTEF increase is 2.5 per cent in nominal terms • The largest average annual increase is in Limpopo of 3.1 per cent • The estimated total of increases are between R10 063 million and R11 371 million mainly to provide for the carry-through effect of the 2022/23 public- service wage increase • To note is the decrease in the total allocation in 2023/24 from the 2022/23 estimate 32 27 March 2023 R million2021/222022/232022/232023/242024/252025/26Average annual MTEF growthActualEstimate in 2022 BudgetEstimate in the 2023 BudgetMedium-term estimatesEastern Cape70 950 72 231 73 593 73 292 76 022 79 620 2.7%Free State30 342 31 107 31 727 31 380 32 369 33 735 2.1%Gauteng115 621 120 042 122 060 120 752 125 438 131 095 2.4%KwaZulu-Natal111 592 114 509 116 697 115 948 118 858 123 812 2.0%Limpopo62 556 64 056 65 241 65 349 67 974 71 502 3.1%Mpumalanga44 543 45 962 46 754 46 674 48 437 50 752 2.8%Northern Cape14 469 14 942 15 219 15 150 15 718 16 463 2.7%North West38 294 39 540 40 255 40 096 41 765 43 843 2.9%Western Cape56 467 58 367 59 322 58 886 60 920 63 448 2.3%Total544 835 560 757 570 868 567 528 587 500 614 271 2.5%2022 MTBPS560 805 556 385 576 501 602 900 Difference10 063 11 143 10 999 11 371 Source: National Treasury Transfers to Local Government 2023/24, • In R164 billion is allocated as direct transfers to local government, while a further R8.5 billion is allocated to be national spent by on behalf of departments municipalities • Of the direct transfers, 68.3
 per cent will be transferred as unconditional for municipalities to use according to the priorities determined by through their their councils budget processes funds • The remaining 31.7 per cent will through be transferred conditional grants • In 2023/24, government is funding free basic services to 11.2 million households at a cost of R70.9 billion 33 27 March 2023 R million2021/222022/232023/242024/252025/26Adjusted BudgetAdjusted BudgetEquitable share and related77 999 87 311 96 546 103 772 109 368 General fuel levy sharing with metros14 617 15 335 15 433 16 127 16 849 Direct conditional grants44 969 51 542 51 992 54 484 57 113 Integrated urban development1 009 1 085 1 172 1 227 1 284 Municipal disaster recovery3 319 321 – – Municipal disaster response764 373 389 407 Municipal infrastructure15 593 16 842 17 545 18 331 19 150 Energy efficiency and demand-side management223 224 243 253 Integrated national electricification programme2 003 2 120 2 212 2 311 2 415 Informal settlements upgrading partnership3 945 4 273 4 365 4 561 4 765 Municipal emergency housing55 – – – Urban settlements development7 405 7 352 8 149 8 793 9 343 Infrastructure skills development159 160 167 175 Local government financial management566 569 594 621 Neighbourhood development partnership1 293 1 475 647 676 Programme and project preparation support361 377 394 411 Expanded public works programme intergrated778 781 816 853 Public transport network5 175 6 013 6 794 7 752 8 369 Rural roads asset management systems115 115 121 126 Regional bulk infrastructure2 237 2 521 3 496 4 099 4 045 Water services infrastructure3 620 3 701 3 864 4 038 4 219 Other3 982 Total direct transfers137 585 154 188 163 972 174 382 183 330 Indirect transfers7 727 8 171 8 481 8 862 9 259 Municipal systems improvement140 147 153 160 Integrated national electricification programme2 824 3 588 3 821 3 993 4 172 Neighbourhood development partnership201 101 105 110 Regional bulk infrastructure3 857 3 470 3 607 3 769 3 938
 Water services infrastructure771 805 841 879 Other indirect grants1 046 Source: National TreasuryMedium-term estimates Underspending of Government Budget Historic spending analysis Reasons for underspending 27 March 2023 34 Research and Analysis • Used mixed method approach, which constitutes quantitative and qualitative analysis, to assess whether and the extent to which there has been underspending in government departments • National and Provincial government departments data at the programme and economic classification level, the Estimates of National Expenditure • Calculated the budget deviations by comparing the adjusted appropriations to the audited expenditure outcomes between 2011/12 and 2020/21 • Departmental annual reports were analysed to collate information on reasons for underspending at the national and provincial level • At the provincial level, the brief assessed the Eastern Cape, Free State, Gauteng and Western Cape.
The sample size constitutes four out of the nine provinces in reflects the rural/urban divide as well as the diversity in the equitable share distribution amongst provinces • These provinces were also chosen to take into account the non-homogeneity in budget and performance outcomes across provinces • The analyses do not reflect quality of spending or compliance standards • On aggregate, national government underspent its budget except in 2019/20.
On aggregate, underspending of the national departments budget has average 2 per cent over a ten-year trend • Underspending in current payments was largely driven by goods and services.
Whereas underspending in buildings and other fixed structures and machinery and equipment were more prevalent in payments for capital assets 27 March 2023 35 Underspending: On aggregate historical trends 27 March 2023 36 YearR millionUnder/(Over) SpendingPer centUnder/(Over) SpendingPer centUnder/(Over) SpendingPer cent2011/1211,5992.3%(354)-0.1%11,2451.2%2012/137,7931.4%(1,825)-0.4%5,9680.6%2013/143,8650.7%1,9640.4%5,8300.6%2014/1510,3821.6%(1,929)-0.4%8,4530.7%2015/166,5990.9%(92)0.0%6,5070.5%2016/176,2990.9%1,1400.2%7,4400.6%2017/1812,6911.6%(77)0.0%12,6150.9%2018/1910,8741.3%(851)-0.1%10,0230.7%2019/20(3,751)-0.4%(635)-0.1%(4,387)-0.3%2020/2120,9222.0%(2,051)-0.3%18,8711.0%Total appropriation by voteTotal direct charges against the National Revenue FundTotal governmentYearR million Under/(Over) spendingPer cent Under/(Over) spendingPer cent Under/(Over) spendingPer cent Under/(Over) spendingPer cent Under/(Over) spendingPer cent2011/126 280.12.8%5 129.50.8%251.42.0%(415.9)-55.4%11 245.11.2%2012/136 261.62.5%2 440.60.3%438.93.0%(3 173.4)-218.7%5 967.80.6%2013/14(3 591.6)-1.3%9 450.01.2%277.91.9%(306.7)-8.5%5 829.50.6%2014/153 839.71.3%5 505.90.7%435.72.6%(1 328.8)-33.6%8 452.60.7%2015/162 310.90.7%5 694.20.6%(1 074.8)-6.2%(423.2)-1.4%6 507.10.5%2016/175 601.31.5%3 551.50.4%(1 051.0)-7.2%(662.2)-11.1%7 439.60.6%2017/181 550.00.4%10 221.31.0%504.93.2%338.41.7%12 614.60.9%2018/193 276.30.8%5 704.70.5%1 786.111.0%(743.6)-5.4%10 023.50.7%2019/201 935.10.4%(9 179.2)-0.8%2 634.117.9%223.20.3%(4 386.8)-0.3%2020/2117 014.23.5%584.50.0%2 875.719.4%(1 603.5)-1.8%18 870.81.0%Current paymentsTransfers and subsidiesPayments for capital assetsPayments for financial assetsTotal government Reasons for underspend: Health Between 2011/12 and 2020/21, the NDoH underspent its budget by an average of 0.9 per cent annually.
Underspending was higher than two per cent only in 2013/14 and 2014/15.

National Health Insurance and Hospital Systems programmes accounted for 70 % • Supply chain management problems: In particular, delays in project completion/ implementation • Process delays: for example the NHI funding received in 2011/12 as the legislative processes delayed the consultation processes • Compensation of employees.

: Vacant posts not being filled in multiple programmes.
• Non-implementation: For example, the Diagnostic Related Grouping that could not be implemented in all the central hospitals • New programme implementation: For example, the Human papillomavirus (HPV) grant and the Medicine Stock System • Transfer issues: For example, Transfer payments to NPOs could not be made due to Service Level Agreements not concluded before the end of the financial year in some years • Funding hurdles: For example, There were delays in the South Africa for negotiating additional Demographic and Health Survey funds the provincial At underspending generally falls below two per cent within our sample level • Medico-legal claims: particularly in the Eastern Cape, have led to underspend in a number of programmes from 2017/18 • Cash flow problems: Non processing of payments • Increased efficiency: In the Free State and Western Cape the department reports that underspending can be attributed to the implementation of efficiency and cost- containment measures to curtail excess expenditure.
• Interdepartmental The projects: Health Infrastructure Grant appears a number of times across all provinces.

In the Western Cape, they note that “areas of under-spending, such as remain a concern and are infrastructure, the being Department of Transport and Public Works”.

addressed together with Contrary to the conventional wisdom that there is large-scale underspending in government, the reality is that on a per capita basis the government is not spending enough and resources are overstretched.
If the resources were made available there could be significant more much needed spending on health.
27 March 2023 37 Reasons for underspend: Social protection Between 2011/12 and 2020/21, the department has been underspending by less than two per cent for all other years except in 2019/20 where they incurred overspending of 7.8 per cent • Supply chain management problems: For in the appointment of example, delays service providers • Procurement processes: For example, the delay in the procurement of white doors in provincial and district areas before end of March 2018 • Delays in project completion: For example delays in services and infrastructure, and delivering of suppliers not being able to deliver • Delays in invoices: For example, invoices not received for office accommodation before end March 2014 • Compensation of employees: Vacant posts not being filled in multiple programmes • Reprioritisation of funds: For example, in 2018/19 R92 million was reprioritised and a portion of this amount was allocated towards funding 200 Social Workers • Challenges with new programmes: For example, the Early Childhood Development programme At the provincial level underspending generally falls below two per cent within our sample.
Provinces levels of recorded the highest underspending in between 2018/19 to 2020/21 • Procurement processes and timelines: For example, contractors performing below par and late submission of invoices and new contractors • Compensation of employees: Vacant in multiple being filled not posts programmes • Challenges with new programmes • Delays in transfers: For example, the EPWP Integrated Grants 38 27 March 2023 Findings on underspending – Basic Education • Non-compliant of Independent schools due to late submission of quarterly reports resulted in underspending as (AFS) and also to underperforming schools department withhold funds • Delays in finalising and filling up vacant posts has been the main driver of the underspending.
Also provincial COE budgets being reduced as part of response to national fiscal consolidation (e.g.
EC 2020/21) • Underspending on the conditional grant is a continued concern as almost all the conditional grants transferred by the department are underspent due failure to comply with conditions • Provincial education budgets are chronically under-spent due to a number of reasons including; • cash flow problems that emanate from wage pressures, • reduced spending baselines that are part of the fiscal consolidation programme, and • under-spending of school infrastructure funding • Eradicating underspending is a complex problem which requires internal work to be done within the DBE, PEDs and grant structures in order to build capacity for planning and the implementation of projects • Our preliminary findings suggest that underspending should not only be considered in terms of capacity to spend.
It suggests that there are serious structural problems in education financing that render provincial education accounts less reliable 39 27 March 2023 Findings on underspending – Higher Education (DHET) • Supply chain management processes, processes and delays underspending in invoices including procurement settlement attributed to • Compensation of employees contributed to underspending between 2015/16 and 2019/20 as the department was slow in filling of vacant posts in multiple programs due to large volumes of applications • Failure to Implement Projects/Programmes was another factor as it resulted in underspending due to the amount of consultation time required as a result of the nature of the project in 2011/12 • Process delays was noted as a contributor to underspending.
For instance; • Skills infrastructure programmes requiring detailed planning and costing before funds could be committed • Delays in finalising capacity building projects • Funds set aside to do a feasibility studies not being claimed as planned • Legal and legislative fees for claims not received for court cases • Operational costs and cost containment measures put in place to ensure 40 that the Department would not overspend its budget 27 March 2023 In summary • The country’ socioeconomic challenges shows that government spending on social protection is an important policy intervention.
However, given poverty- unemployment and inequality levels, government MTEF spending to address these challenges is inadequate • Crime statistics in South Africa are showing worrying increases: • On average, crime has increased by 9.55 per cent (year-on-year) between December 2021 and December 2022 • Government spending of justice and protection services has to be better aligned given that crimes continues to grow and it takes longer to resolve crime cases despite more funds allocation • Government has made slow progress in realising education outcomes set out in the 2019-2024 MTSF, with access to ECD by poorer households have seen decline of the recent years • Progress in International Reading Literacy Study (PIRLS) estimates that the number Grade 4 children that cannot read for meaning will increase from 78 per cent pre-pandemic (2016) to an estimated 82 per cent in 2021 • Of the 7.8 million unemployed individuals in Q4 2022, 40.1 per cent had education levels below matric, 34.4 per cent had a matric, 10.6 per cent were graduates and 21 per cent had other tertiary • The public healthcare system remains overstretched and underfunded • For example: According to the South African Nursing Council, the current nurse-to-patient ratio is 27 March 2023 1:218 patients while the ideal ratio is 1:16 41 In summary •Local government plays a critical role as a first line of interaction between citizens and government •Dissatisfaction with service delivery has often been cited as the reason for the increase in service delivery protests within South Africa •Total consolidated government spending is expected to grow at an average annual rate of 4.5 per cent, from R2.17 trillion in 2022/23 to R2.48 trillion in 2025/26 •In 2023/24, grant levels increase by 5 per cent on average, however these increases are inadequate given that food price inflation was recorded at 13.4 per cent in January 2023 - the highest recorded since April 2009 •Provincial equitable share increases by 2.5 per cent on average over the 2023 MTEF •Most of the provincial CG increase in 2023/24 since the revised estimates in 2022/23 •In 2023/24, R164 billion is allocated as direct transfers to local government, while a further R8.5 billion is allocated to be spent by national departments on behalf of municipalities •Underspending is a concern for Members and several reasons have been identified over years •Despite several concern interventions to address the causes of underspending it remains a 42 27 March 2023 Key policies and legislative consideration- 6th Parliament Legacy Report •Public Procurement Bill – reform?
Minister of Finance to table by March 2023 •Proposed bill will hinder government goal of social and economic transformation of the economy •Localisation, local content, national framework of procurement, BBEEE weighted- all these must be retained in any national procurement bill •Localisation policies to gradually reduce import dependency ratios of some sectors by setting targets for a particular period •Local content requirements to provide clarity on the extent of local ownership, market structure, and requirements to build technology capabilities •Macroeconomic Policy Review -- ?
•Fiscal Policy – •How has has fiscal strategy (consolidation) supported the realization of the 2019-2024 MTSF goals?

•Government and public corporations increase their investment in economic infrastructure, social infrastructure and economic services in line with the NDP targets Thursday, 2 February 2023 43 Key policies and legislative consideration- 6th Parliament Legacy Report •Macroeconomic Policy Review or reform-- ?
•Monetary Policy – •Reserve Bank revert back to its “flexible inflation targeting” regime and upgraded to a dual mandate of both targeting inflation and economic growth at 6% •Adopt necessary measures to raise the annual growth of credit extension to the private sector productive sectors and SMME at a consistent rate annually •Divert money to SMMEs and entrepreneurs willing to help diversify and transform the economy and to creating jobs •Service delivery status-?
•How to ensure District Development Model implementation is streamlined •Spending of core functions (education, healthcare, social development, human settlement, economic development, community development) must be protected from cuts, grow with inflation at least -Grey-listing by FATF- 24 February 2023 •Parliament to consider government action plan to address concerns raised Thursday, 2 February 2023 •Regular or quarterly updates or monitoring on the progress to address concerns 44 Thank you Dr Dumisani Jantjies Director, Parliamentary Budget Office djantjies@parliament.gov.za, 4th Floor, Parliament Towers 103-107 Plein Street, Cape Town, 8000 https://www.parliament.gov.za/parliamentary-budget-office Additional Slides 27 March 2023 46 Local government: Situation analysis • Local government (LG) plays a critical role as a first line of interaction between citizens and government • The business model for LGs is untenable for most LGs because it causes inadequate funding and means they provide inadequate levels and quality of free basic services • Frustration with service delivery is often cited as a crucial reason for the high number of service delivery protests in South Africa • According to Municipal with 193 protests recorded nationwide in 2022 IQ, service delivery protests are back to pre-Covid-19 levels, • Municipal IQ forecasts regular service delivery protests to continue in 2023 because of heightened frustration caused by load-shedding • Poor service delivery has disproportional impacts on different households (along racial, gendered and geographic lines) because it is predicated upon a set of distributive relations across different social groups • COVID-19 has highlighted the centrality of (social) reproduction and the gendered nature of household duties such as cooking, cleaning, water and fuel collection, child care and elder care • Women and girls undertake unpaid on work these vital household duties, which is not recognised in GDP calculations.
Insufficient and poor quality basic services mean that women and girls spend more time on these duties 27 March 2023 47 The provincial equitable share (PES) • The equitable share is the main source of revenue through which provinces are able to meet their expenditure responsibilities.
For each year of the 2021 MTEF, provincial equitable shares amount to: R523.7 billion, R524.1 billion and R525.3 billion • The current PES is allocated through a formula using objective data to reflect the demand for services across all nine provinces • It consists of six components that account for the relative demand for services and take into consideration the change of demographics in each of the provinces.
The formula components are: (DORB p.75-90) • An education component (48 per cent), based on the size of the school-age population (ages five to 17) and the number of learners (Grades R to 12) enrolled in public ordinary schools • A health component (27 per cent), based on each province’s risk profile and health system caseload • A basic component (16 per cent), derived from each province’s share of the national population • An institutional component (5 per cent), divided equally between the provinces.
• A poverty component (3 per cent), based on income data.
This component reinforces the redistributive bias of the formula 27 March 2023 • An economic activity component (1 per cent), based on regional GDP 48 The local government equitable share(LGES) • The local government fiscal framework responds to the constitutional assignment of powers and functions to this sphere of government • The framework refers to all resources available to municipalities to meet their expenditure responsibilities • National transfers account for a relatively small proportion of the local government fiscal framework, with the majority of local government revenues being raised by municipalities themselves through their substantial revenue- raising powers • Poor rural municipalities, however, receive most of their revenue from transfers, while urban municipalities, although not always effective, raise the majority of their own revenues • Funds raised by national government are transferred to municipalities through conditional and unconditional grants • Over the 2021 MTEF period, R432.6 billion will be transferred directly to local government and a further R23.7 billion has been allocated to indirect grants.
• Direct transfers to local government over the medium term account for 9.4 per cent of national government’s non-interest expenditure • When indirect transfers are added to this, total spending on local 49 government increases to 10 per cent of national non-interest expenditure 27 March 2023 LG: Capital and operating revenue trends Capital and operating revenue t n e c r e P 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2017/18 % Share 2018/19 % Share 2019/20 % Share 2020/21 % Share 2021/22 % Share 2022/23 (Q1) % Share Capital and operating expenditure 27 March 2023 50 2017/18 % Share 2018/19 % Share 2019/20 % Share 2020/21 % Share 2021/22 % Share 2022/23 (Q1) % Share The provincial fiscal framework Provincial fiscal framework trajectory from 2021-Conditional grant and PES 646.8 647.2 647.2 684.4 694 525.3 538.8 525.3 556.4 567.5 121.5 121.9 121.9 128 127.5 n o i l l i b ’ R 800 700 600 500 400 300 200 100 0 2021 budget 2021 MTBPS 2022 budget Axis Title 2022 MTBPS 2023 budget PES Conditional grants Total 27 March 2023 51 n o i l l i b ’ R 120 100 80 60 40 20 0 Local Government Allocation to Local Government 104 109 97 87 83 76 66 44 40 45 52 52 54 57 13 14 6 4 15 15 15 16 17 8 8 8 9 9 2019/20 2020/21 2021/22 2022/23 Axis Title 2023/24 2024/25 2025/26 Equitable share General fuel levy Conditional grants Indirect transfers 27 March 2023 52 Budget facility for Infrastructure • The Budget Facility for Infrastructure (BFI) is a multidisciplinary facility that brings together varied government expertise to provide recommendations on the technical feasibility and readiness of infrastructure projects • The purpose of this facility is to: • Support quality public investment by improving the planning, technical assessment, budgeting, and execution of large infrastructure • Assist in building a pipeline of projects through rigorous technical analysis, budgeting, and funding commitments • Six BFI windows have been established since its inception to support large infrastructure projects • The Facility considers the use of blended or hybrid financial solutions that include a combination of grants, debt, and equity sources from both public from multilateral and private institutions, and concessional development banks loans • R2.5 billion was approved for project funding through the BFI processes in the 2022 adjustment budget process, while R24 billion was approved in the 2023 MTEF period 27 March 2023 53 Budget facility for Infrastructure • The Budget Facility for Infrastructure approved R21.7 billion (44.4%) of aggregated capital cost for 13 projects.
The status of human settlements, water and sanitation, and student housing infrastructure projects approved through BFI is as follows: • Three infrastructure projects are under construction • Two infrastructure projects under due diligence • Four infrastructure projects in the procurement process • Four infrastructure projects are awaiting ministerial approval • Projects approved through the BFI as per the 2023 Budget over the MTEF: • Coega SEZ: R1.8 billion over the MTEF.
Previous through DTIC now through the PES • Comprehensive Agricultural Support Programme Grant for Agri-hubs in KZN: R153 million over the MTEF • Public Transport Network Grant: R461 million over the MTEF for the City of Cape Town MyCiTi public transport network project rescheduled • George local municipality potable water security and remedial works project: R136 million over the MTEF rescheduled • New projects include: • eThekwini Metro: Avoca Node • City of Johannesburg: Lufhereng mixed use development programme • Sol Plaatjie Local Municipality: Old water supply infrastructure • Drakenstein Local Municipality: upgrade of sanitation infrastructure 27 March 2023 • Nelson Mandela Bay: Water supply crisis due to ongoing droughts 54 Challenges to service delivery • The financial and operational challenges that hinder local government from delivering basic services are often closely related • Failure to adequately address detrimentally affect social and economic development these challenges cause immense hardship and • According to literature poor performance of LGs is due to a combination of: • capacity constraints • poor planning and ineffective financial management • inadequate monitoring and evaluation in the context of poor governance, • convoluted political processes • corruption • Lack of up to date data exacerbates poor performance.
In 2021, StatsSA suspended the detailed General Household Survey due to budget cuts.

Without this critical information, data driven policy making is undermined • Performance and financial audits by the AGSA point to serious widespread problems within local government.
They reported that: • Only 28 per cent of municipalities submitted credible financial statements for audit in the 2019/20 financial year • The number of municipalities in financial distress increased from 86 in 2013/14 to 175 27 March 2023 in 2019/20, and 123 municipalities passed unfunded budgets 55 Millions of households cannot use electricity to cook Number of households that do not use electricity for cooking and number who use gas for cooking (millions of households) 5 4 3 2 1 0 l d o h e s u o h f o s n o i l l i M 2017 2018 2019 2020 2021 Number of households that do not use electricity as their main source of cooking Number of households that use gas for cooking Source: PBO calculations using GHS 2021 • The ability to use electricity and gas for cooking makes a huge difference to household quality of life and time for other important household tasks • Most South African households suffer from load shedding, which has affected their ability to cook with electricity • Millions of households have been experiencing an even worse situation than load shedding because they are too poor (including, around 10 per cent of total households in 2021 who were not connected to mains) 27 March 2023 56 Strategy in Context 27 March 2023 57 Strategic Execution from Conceptualization Government Budget Addresses the Country’s Socio Economic Developmental Needs that improve the quality of life- 2021 to 2024- The 2019-2024 Medium Term Strategic Framework has set-out seven Outcomes to be realized by 2024.
Government will use the budget another policy instruments to realize National Level these MTSF Outcome Parliament Level Parliament’ oversight process in terms of Money Bills and Related Matters Act assess how government’ proposed budgets contribute to the realisation of national aspirations (Increase Government’s responsiveness and accountability).
During this budget oversight process Parliament is required to take into account inputs from various stakeholders Parliamentary Budget Office Role Provide and advise based on research and analyses outputs to support Parliament’s process of assessing the societal potential, economic and developmental impact of the budget.
The PBO research and analyses outputs aim to provide relevant and necessary knowledge and insights that support and Empower MPs in their oversight role 27 March 2023 Thursday, 2 February 2023 58 Research and Analysis and Parliament Fiscal Oversight Office to remain a strong and independent voice within the budget process in support Parliament’s role of fiscal oversight, to ensure four fundamentals are attained and maintained 1.
Our research, analysis, reports and briefs are reported and presented in a form that is accessible (readable) or understandable by an average MP 2.

Good balance between responding to Committees’ or MPs research or analysis requests, and ability for the Office to initiate own analysis or research 3.

The Office has a fair, clear, transparent and practical workflow and analysis methodology in doing its analysis and research work 4.
Office continues to be highly respected and remain independent, include the Director and the team objective and professional; members, in particular by the Executive and MPs 27 March 2023 59