R2,4bn growth funds withheld

THE National Treasury says it will hold provincial infrastructure funds amounting to R2,4billion in abeyance until progress catches up with cash flows.

The Treasury yesterday issued a statement qualifying an announcement by the Democratic Alliance that Western Cape, the only province controlled by the party, was the only one out of the nine provinces to receive its full allocation of R794,8million for infrastructure projects.

A total of R11,3billion had been earmarked in the 2010-11 year to fund provinces' construction, maintenance, upgrading and rehabilitation of new and existing infrastructure in education, health, roads and agriculture.

The allocation is made in terms of the National Division of Revenue Act that proportions funds from central government to the provinces. The infrastructure grant is one of six such transfers that are made.

Finance Minister Pravin Gordhan had the allocations promulgated in the Government Gazette on March 31.

According to the Treasury statement, when it received expenditure reports from provinces in January it identified under-spending related to infrastructure budgets in all nine provinces.

"Provinces were then advised to implement corrective measures while the last transfer was withheld for 30 days," the statement said.

It continued to say that only one province, Western Cape, had implemented the corrective measures such that the transfer was released.

"National Treasury therefore stopped the final portion of the infrastructure grant to eight provinces. This totals R2,4billion in the 2010-11 financial year," the statement said.

National Treasury spokesperson Jabulani Sikhakhane said the allocation of funds was monitored throughout the financial year and they were stopped being issued once it was seen they were not being spent.

"However, once the projects come back on track, then we will start releasing the funds again," he said.

Sikhakhane said there was a formula used by the National Treasury to determine how much, and when to halt or grant the full allocation.

DA MP James Self said the inability of other provincial governments to spend their allocations meant that they had let their inhabitants down.

He said ANC-run provinces would be denied R2,47billion in infrastructure grants during this financial year because of maladministration, financial mismanagement and poor planning.

Self said this was the equivalent of the funds needed to build 30000 RDP houses.