Public Sector Governance and Accountability Series: Budgeting and ...

Country Case Study: South Africa 521
documents in the budget cycle, the review has become an annual feature in
the cycle, thereby contributing to a high and continuing level of transparency
in a very complex system.
Finally, in addition to the spending information in the documents
described above, actual spending information is published in-year on a
monthly basis for all national departments and on a quarterly basis across
national and provincial governments. Published by the National Treasury, this
information provides vital information to Parliament and other stakeholders
with which to monitor budget implementation. The information is submitted
to the National Treasury under the statutory reporting requirements of spending
departments and forms part of the early warning system whereby deviation
from spending plans can be detected early and addressed by the treasuries.
A New Framework for Public Financial Management
and Reporting
The introduction of an MTEF for fiscal year 1998/99 was followed by the introduction
of a program of financial management improvement. A cornerstone
of this program is the Public Financial Management Act of 1999 (PFMA),
which came into effect in April 2000. The PFMA repealed the 10 exchequer
acts that previously governed public financial management. It was developed
to transform an environment in which financial administration was rule
bound and management exclusively input focused, policy and financial
responsibilities in departments were separated, capital resources and liabilities
were not properly managed, and reliable and timely information was greatly
lacking. The resources of the national and provincial treasuries were devoted
excessively to exercising microcontrol (even mundane matters were referred
to them for approval), while too little attention was paid to strategic management
of public finances in line with policy and efficiency objectives. In short,
practice of functional financial management of public resources in government
as a whole was insufficient.
The PFMA put in place a legal framework for modern public financial
management, shifting the onus of managing the use of resources from central
control to the managers of spending departments and agencies. This
change mirrors the shift in budget preparation practices from central decision
making to discretion resting with spending departments for program
choices within spending ceilings.
To engineer this shift, the PFMA does not prescribe specifics (for example,
what payment approval procedures should be). Instead, the act specifies who
is responsible for putting in place such procedures, what the procedures
should achieve, what the information and reporting requirements are, how