2015 16 - National Treasury

1 2 015 16 National Treasury , Private Bag X115,Pretoria, 0001, South AfricaTel: +27 12 315 5757 Fax: +27 12 406 9055 Coordination, design and layout: National Treasury Communications, Design StudioISBN: 978-0-621-44537-4. RP: 118/2016 This report is also available on P Gordhan, Minister of FinanceI have the honour of submitting the Annual Report of the National Treasury for the period 1 April 2015 to 31 March FuzileDirector-General1. DEPARTMENT GENERAL INFORMATION ..12. MINISTER S FOREWORD ..23. DEPUTY MINISTER S FOREWORD ..44. REPORT OF THE ACCOUNTING OFFICER ..65. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT ..96. STRATEGIC OVERVIEW ..10 Vision 10 Mission and Objectives 10 Values 107. LEGISLATIVE AND OTHER MANDATES ..118. ORGANISATIONAL STRUCTURE (ORGANOGRAM) ..129. PUBLIC ENTITIES REPORTING TO THE MINISTER ..14 PART A: GENERAL INFORMATIONPART B: PERFORMANCE INFORMATION Programme 6: International Financial Relations 141 Programme 7: Civil and Military Pensions, Contributions to Funds and Other Benefits 158 Programme 8: Technical and Management Support and Development Finance 1635.

2 TRANSFER PAYMENTS ..184 Transfer payments to public entities 184 Transfer payments to all organisations other than public entities 1856. CONDITIONAL GRANTS ..186 Conditional Grants and Earmarked Funds Paid 186 Conditional Grants and Earmarked Funds Received 1897. DONOR FUNDS ..190 Donor Funds Received 1908. CAPITAL INVESTMENT ..194 Capital Investment, Maintenance and Asset Management Plan 1941. AUDITOR GENERAL S REPORT: PREDETERMINED OBJECTIVES ..332. OVERVIEW OF DEPARTMENTAL PERFORMANCE ..33 Service Delivery Environment 33 Service Delivery Improvement Plan (SDIP) 35 Organisational environment 35 Key Policy Developments and Legislative Changes 353. STRATEGIC OUTCOME ORIENTED GOALS ..364. PERFORMANCE INFORMATION BY PROGRAMME 2015/16 ..39 Programme 1: Administration 39 Programme 2: Economic Policy, Tax, Financial Regulation and Research 48 Programme 3: Public Finance And Budget Management 58 Programme 4: Asset and Liability Management 90 Programme 5: Financial Accounting and Supply Chain Management Systems 107 National Treasury | Annual Report | 2015/16 PART C: GOVERNANCE1.

3 INTRODUCTION ..1962. RISK MANAGEMENT ..1963. FRAUD AND CORRUPTION ..1964. MINIMISING CONFLICT OF INTEREST ..1975. CODE OF CONDUCT (COC) ..1976. HEALTH SAFETY AND ENVIRONMENTAL ISSUES ..1987. SCOPA RESOLUTIONS ..1988. PRIOR MODIFICATIONS TO AUDIT REPORTS ..1999. INTERNAL AUDIT AND AUDIT COMMITTEES ..19910. AUDIT COMMITTEE REPORT ..2031. INTRODUCTION ..2062. EXPENDITURE ..2063. EMPLOYMENT AND VACANCIES ..2094. JOB EVALUATION ..2125. EMPLOYMENT CHANGES ..2136. EMPLOYMENT EQUITY ..2157. PERFORMANCE 2208. FOREIGN WORKERS ..2229. LEAVE UTILISATION FOR THE PERIOD1 JANUARY 2015 TO 31 DECEMBER 2015 ..22210. HIV AND AIDS AND HEALTH PROMOTION PROGRAMMES ..22411. LABOUR RELATIONS ..22612. SKILLS DEVELOPMENT ..22813. INJURIES ON DUTY ..2291. REPORT OF THE AUDITOR-GENERAL ..2312. ANNUAL FINANCIAL STATEMENTS ..2361. ABBREVIATIONS AND ACRONYMS ..420 PART D: HUMAN RESOURCE MANAGEMENTPART E: FINANCIAL INFORMATIONPART F: ABBREVIATIONS AND ACRONYMSN ational Treasury | Annual Report | 2015/162015/16 | National TreasuryxNATIONAL Treasury VOTE 7 GENERALINFORMATION1.

4 DEPARTMENT GENERAL INFORMATION 2. MINISTER S FOREWORD3. DEPUTY MINISTER S FOREWORD4. REPORT OF THE ACCOUNTING OFFICERPARTA12015/16 | National TreasuryNATIONAL Treasury VOTE 712015/16 | National TreasuryPART A: GENERAL INFORMATION1. DEPARTMENT GENERAL INFORMATIONPHYSICAL ADDRESS:40 Church Square PretoriaPretoria, 0002 POSTAL ADDRESS: Private Bag X115 Pretoria, 0001 TELEPHONE NUMBER/S: 027 12 315 5944FA X NUMBER: 027 12 406 5095 EMAIL ADDRESS: WEBSITE ADDRESS: 1. DEPARTMENT GENERAL INFORMATION 2. MINISTER S FOREWORD3. DEPUTY MINISTER S FOREWORD4. REPORT OF THE ACCOUNTING OFFICER2015/16 | National Treasury2 National Treasury VOTE 7 PART A: GENERAL INFORMATION - CONTINUED2015/16 | National Treasury22. MINISTER S FOREWORD Eight years after the Great Recession of 2008, the global economy remains weak and growth prospects uncertain.

5 New geopolitical and socio-economic challenges have emerged that require greater co-operation internationally and higher levels of commitment by individual countries to tackle domestic problems in partnership with such as Brexit, the slowdown in China, the volatility in world markets, the commodity cycle and the rise of far-right movements and extremism in various parts of the world point to a difficult period ahead. Lower economic growth has become the new normal. Growth projections by the International Monetary Fund and other forecasters continue to be adjusted developments throw into sharp focus our need for concrete plans about how to achieve more rapid growth and how to ensure that it is inclusive and benefits all citizens. This is our responsibility both as government and citizens. Together we must solve our development challenges. We have a South African National Development Plan.

6 But more important than our plans is our collective capacity to implement policies and programmes that will practically address poverty, unemployment and inequality. Decisive and effective implementation is that much more critical in the current environment of constrained growth and global economic growth limits the resources available to finance government s developmental objectives. In this context, we have been prudent in the management of public finances. Cabinet has been instrumental in ensuring that the budget is closely aligned with the NDP and that infrastructure investment can continue to be prioritised. Tough decisions have been taken on the expenditure ceiling for the current MTEF period, while protecting spending on our critical social programmes. In the year under review, our credit ratings have come under pressure. By working closely with the private sector, civil society groupings and organised labour, South Africa has retained its investment grade credit rating.

7 In this spirit of co-operation we will continue to promote inclusive growth through an economic reform agenda, promotion of job-intensive sectors, investment in our cities and support for rural development. Pravin GordhanMinister of Finance32015/16 | National TreasuryNATIONAL Treasury VOTE 7 PART A: GENERAL INFORMATION - CONTINUED32015/16 | National TreasuryThe constrained fiscal environment also demands that we ensure that we get value for the money government spends. Working with four provinces, for example, the Office of the Chief Procurement Officer has achieved savings in spending on textbooks and learner support and teacher material. There is more that government can do in this area and I have set the OCPO a target of savings of R25 billion in the medium-term. Savings such as this will enable government to shift funds towards key areas such as student finance and health and economic challenges in the period under review have been a reminder of the role of strong institutions to build our democracy.

8 The National Treasury is one such institution, with a mandate to ensure stable public finances, fairness, transparency and accountability, in line with the tenets of the Constitution is our guide in all that we do and sets the foundation for a transformed society in which all have dignity and participate meaningfully in the economy. In strengthening the resilience and moral character of the institutions of our democracy, we enable services to be provided to our people impartially, fairly, equitably and without bias. I am honored and privileged to serve my country in this portfolio. I would like to express my gratitude to the Director-General Mr Lungisa Fuzile, for his leadership of the Treasury and for agreeing to extend his appointment. As Deputy Minister of Finance, Mr Mcebisi Jonas has been a comrade and a valued advisor. I am grateful to the staff of the National Treasury and all the entities in the finance family for their hard work on behalf of the people of South Africa.

9 Let us continue to build strong and principled institutions that will be our legacy to future GordhanMinister of Finance2015/16 | National Treasury4 National Treasury VOTE 7 PART A: GENERAL INFORMATION - CONTINUED2015/16 | National Treasury43. DEPUTY MINISTER S FOREWORD To build on the economic gains that South Africa has made since the dawn of democracy, the country needs a stable economic environment, strong institutions, a strong and resilient financial system that facilitates meaningful participation by all, regulatory bodies that protect the integrity of that system and ensure it is fair to all, a revenue authority that is trusted by the citizenry. All this must be coupled with prudent financial management of state finance family entities that South Africa has built over the years exist for the purpose of ensuring that government can create an economically and financially stable country that will meet its developmental objectives.

10 It is our duty as citizens and government to guard jealously the relative strength and integrity of these institutions so they can perform their mandates without undue influence. The capacity of the state to deliver a better life for the citizens depends heavily on strong institutions. The survival of our democracy depends on entities such as the South African Revenue Service (SARS), the Development Bank of Southern Africa (DBSA), the Land Bank, the Public Investment Corporation (PIC), the Financial Services Board (FSB), the Accounting Standards Board (ASB), the Financial Intelligence Centre (FIC), the Government Pensions Administration Agency (GPAA), the South African Special Risks Insurance Association (Sasria) and South African Airways (SAA) outlasting all of us. The maturity of our democracy will depend on these institutions being able to function and execute their mandates without fear or would like to highlight some of these.