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Projects postponed, funds redirected to COVID-19

In preparing the 2020 Supplementary Budget, National Treasury and national departments have conceded that certain projects and programmes will have to be postponed from the 2020/21 financial year.

National Treasury revealed this in the Supplementary Budget Review report delivered by Finance Minister Tito Mboweni on Wednesday.

The document reveals that spending was adjusted by removing funds underspent due to delays caused by the lockdown from the baselines of affected departments.

Allocations were also being suspended for capital and other departmental projects, which could be delayed or rescheduled to 2021/22 or later.

Programmes with a history of poor performance and/or slow spending have also suffered the unfortunate fate.

Funds are also being redirected towards the COVID-19 response within functions or towards governments fiscal relief package.

The majority of suspensions identified within conditional grants for COVID-19 interventions have been repurposed accordingly within the grants, the Budget Review report states.

The largest reprioritisations were to the education infrastructure grant to provide water, sanitation and personal protective equipment to schools, and construct temporary classrooms and fund continual deep-cleaning of facilities. Reprioritisations are also being redirected to the municipal infrastructure grant to provide water to households and sanitise public transport facilities in municipalities that do not receive the public transport network grant.

The net in-year suspension of R10.8 billion to the grants is temporary and only to provide emergency funds for the pandemic response.

Most of the main budget spending revisions by economic classification are in the transfers category, with R20 billion from transfers to provinces for the repurposing of the provincial equitable share, as well as suspensions in provincial and local conditional grants, said Treasury.

These resources are mainly allocated to provincial health and education interventions, as well as providing funding for increased social payments to vulnerable households.

In the current year, reveals the report, R40 billion will be drawn down from social security funds cash surpluses to provide wage support to vulnerable employees due to the pandemic.

Public entities, social security funds and provinces are projected to have a combined cash deficit in 2020/21. This, together with the widening main budget deficit, results in the consolidated budget deficit more than doubling to a projected 15.7% of GDP in the current year, compared with the 2020 Budget estimate of 6.8%, the report adds.

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