The Eastern Cape government’s debt to its suppliers has been increasing by more than R1-billion a year over the past three years.
This was confirmed by finance MEC Sakhumzi Somyo who, in a report tabled to the Bhisho legislature, revealed the provincial government carried a R3.8-billion debt as at the end of the 2016-17 financial year.
The debt was accumulated over the past three financial years.
In his report, Somyo said in the last financial year (2016-17), debt accruals totalled R3.889-billion compared to a total of R2.480-billion in the previous financial year (2015-16). For 2014-15, they were at R1.671-billion.
Somyo’s report comes after DA MPL Bobby Stevenson had written parliamentary questions to the MEC seeking answers on such debt accruals.
Stevenson yesterday said ideally debt accruals should be decreasing and not increasing.
He said the increasing amount of accruals “exposed financial mismanagement” that was sweeping through government departments, “and which has devastating implications for the province”.
“These accruals have a crippling effect on some of the provincial departments, as well as our struggling Eastern Cape economy.
“The knock-on effect of business not being paid within the required 30 days is horrific.
“It results in bankruptcy and layoffs, which adds to the unemployment rate of which the Eastern Cape is the highest in the country, at 35.5%,” said Stevenson.
According to the report, the biggest contributor to the government debt is the department of health.
Its accrued debt jumped from R892963 in 2015 to R1.3-million last year. Recently it recorded an accrued debt of R1.9-million.
It is followed closely by the department of roads and public works and the education department with an accrued debt of R640983 and R557401 respectively.
It was only the provincial legislature that did not have an accrued debt in the 2016-17 financial year.
Speaking to the Daily Dispatch yesterday, finance department spokeswoman Nosisa Sogayise said the increase in the debt accruals was caused by variations in inter-departmental budget pressures.
However, she said her department was engaging departments and encouraging a tighter level of commitment to their budgets.
“Recently, the province has experienced a sudden surge, mainly in medico legal claims which has led to the escalation or the gradual increase in the accruals as this is an unbudgeted item.
“The department holds quarterly forums where we engage departments and advise them on the matter of increasing accruals,” said Sogayise.
Roads and public works and human settlements departments’ accruals doubled, from R319.8-million the previous year, to R640.9-million and from R218-million to R510-million respectively, according to Somyo’s report.
Office of the Premier increased theirs from R12.6-million in 2015-16 to R35.7-million in 2016-17.
The health department ran up a total of R1.914-billion in accruals in the last financial year, compared to R1.342-billion the previous year.
Stevenson said this was a recipe for disaster.
“If debt continues to rise at this rate, the health department is on the road to becoming completely dysfunctional,” said Stevenson. — simthandilef@dispatch.co.za
EC province's debt accrual rises by R4bn
This was confirmed by finance MEC Sakhumzi Somyo who, in a report tabled to the Bhisho legislature, revealed the provincial government carried a R3.8-billion debt as at the end of the 2016-17 financial year.
The debt was accumulated over the past three financial years.
In his report, Somyo said in the last financial year (2016-17), debt accruals totalled R3.889-billion compared to a total of R2.480-billion in the previous financial year (2015-16). For 2014-15, they were at R1.671-billion.
Somyo’s report comes after DA MPL Bobby Stevenson had written parliamentary questions to the MEC seeking answers on such debt accruals.
Stevenson yesterday said ideally debt accruals should be decreasing and not increasing.
He said the increasing amount of accruals “exposed financial mismanagement” that was sweeping through government departments, “and which has devastating implications for the province”.
“These accruals have a crippling effect on some of the provincial departments, as well as our struggling Eastern Cape economy.
“The knock-on effect of business not being paid within the required 30 days is horrific.
“It results in bankruptcy and layoffs, which adds to the unemployment rate of which the Eastern Cape is the highest in the country, at 35.5%,” said Stevenson.
According to the report, the biggest contributor to the government debt is the department of health.
Its accrued debt jumped from R892963 in 2015 to R1.3-million last year. Recently it recorded an accrued debt of R1.9-million.
It is followed closely by the department of roads and public works and the education department with an accrued debt of R640983 and R557401 respectively.
It was only the provincial legislature that did not have an accrued debt in the 2016-17 financial year.
Speaking to the Daily Dispatch yesterday, finance department spokeswoman Nosisa Sogayise said the increase in the debt accruals was caused by variations in inter-departmental budget pressures.
However, she said her department was engaging departments and encouraging a tighter level of commitment to their budgets.
“Recently, the province has experienced a sudden surge, mainly in medico legal claims which has led to the escalation or the gradual increase in the accruals as this is an unbudgeted item.
“The department holds quarterly forums where we engage departments and advise them on the matter of increasing accruals,” said Sogayise.
Roads and public works and human settlements departments’ accruals doubled, from R319.8-million the previous year, to R640.9-million and from R218-million to R510-million respectively, according to Somyo’s report.
Office of the Premier increased theirs from R12.6-million in 2015-16 to R35.7-million in 2016-17.
The health department ran up a total of R1.914-billion in accruals in the last financial year, compared to R1.342-billion the previous year.
Stevenson said this was a recipe for disaster.
“If debt continues to rise at this rate, the health department is on the road to becoming completely dysfunctional,” said Stevenson. — simthandilef@dispatch.co.za
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending Now
Latest Videos