Windhoek-Finance Minister Calle Schlettwein has reiterated a call for maintaining fiscal discipline, specifically by eliminating unauthorised expenditure of government funds. Some of the unapproved commitments during the current financial year, specifically within the roads sector, amounted to about N$450 million, which Schlettwein described as unauthorised expenditure.
While reserves for these unauthorised projects were eventually freed up from government reserves, Schlettwein said this unauthorised expenditure places an unnecessary burden on available resources. He vowed to bring the culprits who authorise funds not officially committed to specific projects to book by letting the law run its course.
During a media briefing last week on the state of the economy, Schlettwein noted that government’s monthly spending is aligned to cash flow conditions and, in this regard, a Treasury Authorisation Warrant (TAW) is used as a tool to ensure that ministries align monthly expenditure to available income.
“Last December, I had the opportunity to address the public on the government plan for honouring its outstanding payments, some of which arose from overcoming the government with unauthorised expenditure. As I have stated previously, the revised budget for 2017/16 is fully-funded, with funding smoothly spread out over the financial year. The expenditure execution to date of 75 percent, suggests that we are well on course to meet to fully execute the budget for FY2016/17,” said Schlettwein.
Since November 2016, following the Mid-Year Budget Review, government deliberately increased payments to suppliers, contractors and other service providers. To put this into perspectives, the TAW approved for November and December 2016, amounted to N$8.2 billion, whilst the actual payments made by the Government totalled N$10.1 billion.
“I thus urge Offices/Ministries and Agencies to diligently set out their TAWs and to timeously submit their requests to the (Finance) ministry in accordance with the established procedures. I should also state that during the month of December 2016 alone, the government was able to execute a total of N$5.6 billion expenditure, which was about 21 percent higher than the previous month as part of the government’s expressed commitment to honour its contractual obligations. We have increasingly honoured some of the outstanding obligations which are duly budgeted for in the current revised budget,” Schlettwein added.
Government’s total expenditure for the current financial year was revised downward by N$4.5 billion to N$61.49 billion as a measure to align the budget to a revised economic and revenue outlook.
“I thus wish to assure the public and the service providers to government that the current budget implementation is on course. The preparation for the 2017/18 budget is also on course and I intend to table the budget not later than the second week of March 2017. I have also laid out the priorities and fiscal policy stance for the next Medium Term Expenditure Framework (MTEF) during the Mid-Year Budget Review. We shall follow through with the stated policy direction, emphasising fiscal consolidation and without losing focus on growth dimension as well as poverty reduction efforts,” Schlettwein stated.
Weighing in on the consequences of unauthorised expenditure, a local economist, Frans Uusiku, said it poses a risk of compromising the prudent management of public funds from a fiscal accountability perspective. “This would mean that the government would have difficulties of making essential payments (such as salaries) during the periods of fiscal squeeze, like now,” said Uusiku, an economist at local stock brokerage, Simonis Storm Securities.
Uusiku noted that Section (17) of the State Finance Act (No. 31 of 1991) makes provision for the prohibition of incurring expenditure without Treasury authorisation. “By interpretation, the transgression of this provision should be subject to disciplinary challenge. However, we believe that the said Act has not vividly spelled out the type of punishment, if any, to be invoked in respect of any official or government institution that have effected unauthorised expenditure,” said Uusiku.