E Cape gives Manuel the finger
Bisho has placed the retrenchment issue right back in central government's
hands, writes QUENTIN WRAY
A shroud of mystery hangs over the Eastern Cape's precarious financial situation. Until the 1998/99 budget is revealed in April, it will not be known if the province will fare any better next year. Speaking at the opening of the provincial legislature, premier Makhenkesi Stofile confirmed this week that his administration was heading for a staggering R1.5-billion deficit in the 1997/98 financial year.
The financial chaos in the Eastern Cape is the latest development in a worsening relationship between Manuel and the provinces. Manuel has told them to tow the line, making R1.5-billion available in the current year if they show fiscal stringency.
In addition, provinces received R600-million from the contingency reserves, meaning that their combined budgets for 1997/98 have been increased by R2.1-billion from the original R80.8-billion.
On Friday it emerged that a number of provinces are withholding their civil servants' tax payments in order to boost their cash-flow and reduce debt with banks. The provinces' combined overdrafts are estimated to be around R2.5-billion.
Eastern Cape finance and economic affairs MEC Enoch Godongwana said his department was negotiating with the national executive on how to deal with the deficit.
The province said it could use all of the R1.5-billion additional appropriation. Godongwana said most of the steps required by the national executive had been taken. Conditions for the hand-out, such as improved collection of revenue, strict control over appointments, good financial reporting and cash-flow management, were all part of "normal transparent governance".
The conditions were "neither here nor there", as his department had already started doing these things, he said.
He put the ball into Pretoria's court by arguing that retrenchment of staff was a national rather than a provincial competency and it was therefore up to central government to provide the provinces with a framework for retrenchments.
He said: "National government should provide us with the necessary financial resources to cushion the effects of retrenchments as we do not want to just throw our people in the street."
Eddie Trent, the only Democratic Party MPL in the Eastern Cape, said Stofile's estimate was very optimistic. He said his efforts to get up-to-date details of departmental overdrafts and appropriation accounts had been unsuccessful.
Trent, who is known for his criticism of Bisho's seeming lack of financial control, said he had warned the provincial legislature that the province's budget was unrealistic and that it would inevitably overspend, especially in the area of education. Trent said last November that, according to his calculations and based on figures presented to him by the provincial treasury, the province would be R2.5-billion in the red by the end of March.
He said he did not understand how the estimated shortfall could drop by as much as R1-billion when, according to his information, between 85% and 90% of government expenditure was on salaries and no-one had yet been retrenched.
On the history of Bisho's cash-crisis, Trent said: "I believe that they have wasted as much as R3-billion in the last four years.
"They failed to rid the payrolls and welfare systems of ghosts, and duplications and have wasted a fortune on the old Transkei and Ciskei agricultural parastatals. The austerity measures taken are definitely far too little, way too late," he said. - Eastern Cape News Agency.