Government allocates R265 million to get South Africa off greylist – Godongwana

As part of the response measures to the recent placing of the country on the greylisting, the Financial Intelligence Centre has been allocated additional funding of more than R200 million to implement the financial action task force’s recommendations to get the country off the grey list.

This was announced by Finance Minister Enoch Godongwana as he was presenting National Treasury’s budget in parliament on Tuesday.

Godongwana: Country making progress

The Financial Action Task Force (FATF) in February greylisted South Africa for not having done enough to combat money laundering and the financing of terrorism.

Gondongwana said the country was on its way off the greylist.

“Our efforts to get the country off the greylisting are well underway. We will update Cabinet on the progress made,” said Godongwana.

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Answering questions in the National Council of Provinces in Parliament in March, President Cyril Ramaphosa said South Africa had made “significant” progress to address the issues raised by the financial action task force.

“Such progress included the passage of two key Acts at the end of December 2022, namely the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act,” said Ramaphosa at the time.

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“As a result, our agreed Action Plan has now been reduced to eight focus areas. These areas relate largely to the effectiveness of our authorities in implementing the various elements of our anti-money laundering and combating of the financing of terrorism system.”

Public sector wage bill

Godongwana further told parliament that the government currently spends roughly one third of its budget on the salaries and benefits of the public servants and political office bearers.

“A key challenge to the fiscus is the management of the public sector wage bill,” he said.

“The recent wage agreement has placed upward pressure on the wage bill. This means that in this current financial year, the National Treasury must identify over R37.4 billion in savings to cushion the blow on the fiscal framework. This will involve executing difficult trade offs.

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“The National Treasury is working with the department of public service and administration and provinces to find ways of restricting head counts, among other things so that the funds to the wage increase can be recooked.”

Municipalities’ debt

On Municipalities, Godongwana said “decisive action” was needed to restore the integrity of municipalities, which were struggling with financial management.

“Unfunded mandates, over-expenditure, ineffective revenue management practices are manifested in many municipalities defaulting on payments to creditors and falling into financial and service delivery crises.”

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As a result, the government has placed 25 municipalities under mandatory interventions.

“Professionalising the administration of municipalities is a critical pillar of addressing these issues, particularly in training of chief financial officers and municipal managers,” said Gondongwana.

“We are resting, our interventions are beginning to bear fruits.”

Eskom debt

One of the biggest debt municipalities have been struggling with is the Eskom debt, which stood at R56.3 billion in December.

To help municipalities cope with the growing electricity debt, Eskom plans to provide incentivised relief to municipalities whose debt is unaffordable.

Deputy President Paul Mashatile said in March that the new energy ministry would work with the National Treasury and municipalities to facilitate payment of outstanding monies owed to Eskom.

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“As outlined in the budget speech in February this year, the National Treasury is working with Eskom to provide a sustainable solution to the crisis of municipal debt,” said Mashatile.

“It is clear that we need a debt relief strategy that will acknowledge the inherent risks of unviable municipalities.”