Gordhan moots contingency reserve


    26 October 2011

    The National Treasury is looking at creating a separate kitty or “policy reserve” of funds, drawn from surpluses in its existing investments and revenue, in order to support economic development, Finance Minister Pravin Gordhan announced in Cape Town on Tuesday.

    Presenting his Medium Term Budget Policy Statement in Parliament, Gordhan said the government had substantial financial investments, some of it in surplus cash and some in other assets.

    “Where these resources could more productively be applied to other priorities, we will return surplus funds to the fiscus” for

    Kitty for priority projects

    In a media briefing shortly before delivering his speech in Parliament, Gordhan said a figure had not been developed yet for how much the National Treasury wanted to place in the policy reserve, but that it was likely to be in the “tens of billions” of rands.

    This could be drawn from state-owned companies and other public entities with surplus cash. Government departments could also have a percentage shaved off their budgets and transferred to the reserve kitty.

    These funds would be used for “public-policy priorities”, special projects which the Cabinet would decide upon and which would be disclosed in next year’s Budget, Gordhan said.

    Tighter government spending

    Gordhan added that greater efficiency must also be sought in government cash management and in the procurement of goods and services, by strengthening ordinary disciplines of financial management.

    In this way, further steps would be taken to reduce administrative costs and unnecessary duplication of capacity.

    “Departments will be obliged to identify and report on savings initiatives. We will request the Auditor-General to strengthen his focus on value for money,” said Gordhan.