THE MEDIUM TERM EXPENDITURE FRAMEWORK

1 49 THE MEDIUM TERM EXPENDITUREFRAMEWORKS ocial and development policies and the budgetThis chapter reviews the MEDIUM term spending plans of national andprovincial government. It outlines the spending of national andprovincial government, and the budget allocations to local highlights the impact of key national policy priorities on trends inspending on the main functions of Government, and the trends ininvestment and personnel prioritiesThe President s opening address to Parliament on 25 June 1999committed Government to building a people-centred society that issustained by a growing economy capable of providing services to allSouth has made significant strides in developing acomprehensive social and economic policy and legislative hard work lies ahead speeding up service delivery andimplementing programmes that will improve the quality of life of allpeople in our

2 The past three years there has been a major shift towards socialservice provision. This has created an environment in whichGovernment is able to focus on improving the efficiency andeffectiveness of social spending as it grows moderately in the of the key MEDIUM term policy and development prioritieshighlighted by the President are: strengthening and modernising the integrated justice system;Spending reflectsGovernmentprioritiesSocial and economicpolicies in place41999 MEDIUM Term budget policy Statement50 accelerating investment and further public sector restructuring.

3 Implementing poverty relief and Jobs Summit programmes thatfocus on the rural poor; transforming social services in response to HIV/AIDS anddevelopment needs; improving the quality and effectiveness of education and training;and contributing to regional conflict-resolution and promoting theAfrican proposes to allocate additional funds to the integratedjustice sector to improve the efficiency and effectiveness of the sectorin the fight against of state assets has focused on core functions of publicenterprises, improved management and more effective services.

4 Thecurrent restructuring of the Government s forestry operations and theSouth African Post Office has released resources to be spent on otherGovernment enterprise restructuring over the next three years will contributefurther to reducing government debt and improving the transparencyand effectiveness of government areas are specifically targeted in several poverty relief and JobsSummit programmes, the extension of the municipal infrastructureprogramme, and water supply is committing more funds to developing an intersectoralstrategy and transforming social services to combat the spread ofHIV/AIDS in South efficiency and effectiveness of spending in the formal educationsystem is a key priority.

5 Improved financial management and qualityin the classroom are the key elements of reform in provincial educationspending. This is supported by an ongoing conditional grant skills development levy-grant programme will be introduced in2000/01 to strengthen industrial training and create learningopportunities for the unemployed. A skills development levy onpayroll will finance implementation of the Government is committed to contributing to conflict-resolution onour continent through concerted diplomatic engagement and defenceforce peace-keeping activities.

6 A strategic arms procurementImproved safety andsecurityPublic enterpriserestructuringFocus on the ruralpoorHIV/AIDS strategyQuality educationSkills developmentand further educationConflict-resolutionChapter 4: MEDIUM Term EXPENDITURE Framework51programme will commence in 2000/01 to strengthen South Africa sdefence and peace-keeping for service deliveryBudgets are more than just numbers. They reflect the Government spolicy priorities, and ultimately, are about delivering better services topeople. Improving the quality of government spending andstrengthening service delivery are central commitments of thedemocratic Government s second MEDIUM Term EXPENDITURE FRAMEWORK (MTEF) providesGovernment with a tool to manage the tension between competingpolicy priorities and budget realities.

7 This helps to reprioritiseexpenditure and make informed policy choices that are affordable inthe MEDIUM spending alone cannot deliver services. Government is placinggreater emphasis on the delivery of quality and efficient services topeople. budget decision-making must take account of what money willbuy, and direct spending in a way that has the greatest impact onpeople s quality of decisions are made on the basis of information on servicedelivery. Improved service delivery information will indicate howmoney is being spent, enabling budgeting to direct funds to where theyare most needed, and to where they best contribute to meetingGovernment s National EXPENDITURE Survey was introduced this year, for the firsttime publishing service delivery information with the have similarly improved th equality of budgetdocumentation.

8 The 1999 Intergovernmental Fiscal Review expandedthis information base, outlining key social service delivery informationat the provincial aims to improve service delivery information that is usedto inform budget decisions. Better service delivery informationpublished in budget documentation also enables Parliament andprovincial legislatures, as well as the public, to understand whatgovernment does, what programmes and activities are funded, andwhat outputs the budget reflect policyprioritiesService deliveryinformationInformed budgetdecision-making1999 MEDIUM Term budget policy Statement52 Projected EXPENDITURE trends and the division ofrevenueProjected EXPENDITURE trends set out in tables to includeconsolidated national and provincial EXPENDITURE , and reflect the shareof the national budget going to local projections reflected in this chapter are based on preliminaryproposals for national and provincial spending.

9 More detailedEstimates of EXPENDITURE will be tabled before Parliament andprovincial legislatures in February by sphere of governmentTable shows projected spending by national and provincialgovernment, and the national budget allocation to local government,comparing projections to the 1999 : Consolidated EXPENDITURE by sphere of government1998/991999/002000/012001/0220 02/031999/002000/012001/02R billionOutcomeRevisedMedium term estimatesChanges from 1999 BudgetNational spending(excludingconditional grants)68,271,777,482,787,21,74,76,5 Provincialspending92,797,3104,5110,3117, 01,92,33,3 Total nationaland provincialspending160,9169,0181,9193,120 4,23,77,09,8 Local governmentequitable shareplus conditionalgrants2,22,52,83,03,20,20,40, 5 Debt service costs42,644,747,650,853,0- 1,4- 2,2- 1,8 Unallocatedreserves0,02,53,75,78,3- 1,0- 1,4- 3,8 Committed funds0,51,31,52,52,70,5-0,3-0,3 Total206,2219,9237,5255,0271,41,93,54,4 Compared to projections at the time of the 1999 budget .

10 Non-interestexpenditure has increased and debt service costs shows the shares of spending for national and provincialgovernment, and the local government equitable share, and theirprojected growth over the MTEF spendingprojectionsShares of spendingChapter 4: MEDIUM Term EXPENDITURE Framework53 Table : Consolidated EXPENDITURE shares and growth1998/991999/002000/012001/022002/0 31999/00 to 2002/03per centOutcomeRevisedMedium term estimatesAverage annual growthNational spending(excludingconditional grants)41,8%41,8%41,9%42,2%42,0%6,7%Prov incialspending56,9%56,7%56,6%56,3%56,4%6 ,4%Local governmentequitable shareplus conditionalgrants1,3%1,5%1,5%1,5%1,6%8,7 %Total100,0%100,0%100,0%100,0%100,0%6,6% Excluding debt service costs, total EXPENDITURE shown in table rises on average by 7,6 per cent a year from 1999 /00 to 2002 setting aside the contingency reserve and committed funds,available EXPENDITURE grows by 6,6 per cent a year.