Treasury considers centralised buying of PPE to curb graft: Mboweni

29 July 2020 - 16:05
Tito Mboweni said reports that R500bn allocated to deal with the coronavirus emergency had 'disappeared' were an urban legend.
Image: Sunday Times/Esa Alexander Tito Mboweni said reports that R500bn allocated to deal with the coronavirus emergency had 'disappeared' were an urban legend.

The government may centralise procurement of Covid-19 personal protection equipment as a measure to curb fraud and corruption.

Finance minister Tito Mboweni told parliament on Wednesday that in light of reports of tender fraud, particularly related to PPE, he instructed National Treasury officials to find ways to curb graft.

“We've been reading reports about possible acts of corruption in some of the contracts awarded with respect to Covid-19 equipment.

“To that extent I've held discussions with the National Treasury director-general [Dondo Mogajane] and executive committee to see how further we can tighten the procedures. He is working on it.

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“One of the things we were thinking about is to centrally purchase some of the equipment required given the capacity issues between ourselves and the national department of health,” he said.

Mboweni was speaking during the debate on the Adjustments Appropriation Bill, or supplementary budget, which he tabled last month.

The National Assembly passed the supplementary budget, which was meant to deal with the Covid-19 pandemic and which reprioritised funds from some government programmes to the fight against the pandemic — with 226 voting in favour and 129 against.

In the same breath, Mboweni said it was incorrect that every contract or tender issued was equivalent to corruption.

“Related to that I must emphasise that the feeding frenzy that is going on now in the country, that every contract or tender issued is equivalent to corruption, is incorrect.

“And to assume that a tender that is at R125m, for example, is a gift to somebody is incorrect,” he added, before he was drowned out by heckling opposition MPs.

Mboweni also dismissed as an “urban legend” rumours that the R500bn Covid-19 relief and stimulus response announced by President Cyril Ramaphosa has disappeared.

“Nothing could be further from the truth. That is the most amazing urban legend,” he said. “How could R500bn disappear? There is nothing of the sort.”

Mboweni said the government has experienced some technical difficulties with the R200bn loan guarantee scheme which the National Treasury, the Reserve Bank and private banks are working on to restart. He didn't go into the details of those technical difficulties.

Responding to criticism regarding the IMF loan approved this week, Mboweni said international borrowing was provided for to fill the gap in the budget.

He said the R70bn loan from the IMF pales into insignificance when compared to weekly borrowings the Treasury does and the international bond issues, if it were to do any.

“When we present the budget in February, we also indicate the revenue paths and the expenditure path and the gap. That gap has to be filled by domestic borrowing and international borrowing.

“What you find in the documentation referred to as annual borrowing requirement,” he said.

Mboweni said in 2019, for example, part of the international borrowing requirement resulted in SA issuing an international bond of US$5bn in the market at a much higher rate than the $4.2bn loan the country is taking from the IMF.

“On a weekly basis, we issue Treasury bonds domestically in the South African market which is weekly borrowings that we make, sometimes up to R20bn a week. That is meant to finance the gap that I spoke about,” he said.

SA's  IMF loan has an interest rate of 1.1%.

The country also approached the New Development Bank which has made available $1bn and the African Development Bank has made available about R5bn.

“This misunderstanding about the IMF loan as the biggest devil has arrived in town is quite incorrect,” said Mboweni.

“We must understand it within the context of Covid-19 and within the context of borrowing requirements that we would have had to enter into anyway, either by issuing a global bond or some other domestic bond,” he said.

For DA MP Geordin Hill-Lewis, the approval of the IMF loan was a turning point for SA.

“Perhaps most importantly, this is a budget which for the first time in SA’s democratic history, relies on lending money from the International Monetary Fund,” he said.

“This is not something to celebrate. The simple truth is that no growing and healthy economy is forced to borrow from the IMF, and no responsible government ever lets a nation’s finances deteriorate to the point where they must go as supplicants to the IMF,” said Hill-Lewis.

He said the ANC should be ashamed of this.

“It is a stark reminder of the years of mismanagement, bad policy and corruption they have visited on this country.”

Either the government will honour “the laudable” commitments it has made in its letter of intent to the IMF, and begin the slow recovery that will restore the economy to growth or it will honour those commitments in the breach, he said.

He said the DA was committed to supporting deep economic reforms and had shown this by already proposing or introducing many of the measures that government commits to in the letter.

These included its introduction of the Fiscal Responsibility Bill which seeks to introduce a debt ceiling, the Cheaper Electricity Bill which proposes the splitting of Eskom and letting metros buy their own electricity, among others.

The EFF's Floyd Shivambu said the appropriation bill was based on urban legend and falsehood, “a failed PR exercise that there is R500bn injected into the fiscus to fight Covid-19 pandemic”.

“The imaginary R500bn is composed of R200bn loan guarantees which will never be exhaustive and even if exhausted, would benefit white people,” he said.

Shivambu said the reprioritisation programme postponement and budget cuts of other equally important functions of the state were not informed by any expenditure review or analysis.

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“Instead, we are just following IMF austerity drivel and instruction to cut expenditure like headless chickens who cannot think for themselves,” said Shivambu. “We reject Mr Mboweni's comical and misguided handling of possibly the biggest economic crisis since democracy,” he said.

The IFP's Mkhuleko Hlengwa warned Mboweni that his noble efforts, concerns and all the issues he raised would come to nought if the government did not decisively deal with corruption.

“There is poor financial management, there is ill-discipline in the public sector and there is absence of consequences where there should be. Law-enforcement agencies need to step up and ensure they prosecute,” said Hlengwa.

He said the reprioritised budget would find itself being the target of the corrupt elements who want to steal the money the country doesn't have, “whether it is in KwaZulu-Natal with the blankets which were for social relief, whether you go to Gauteng, you are dealing with the PPE, particularly in the department of health, or whether in the Eastern Cape with the so-called scooters and dodgy invoices”.

Had SA done the right thing before the Covid-19 crisis, or had it had proper financial management, it would have found itself in a better position to manage and weather the storm which Covid-19 beset on SA and the global economy.

“We now have to borrow money on one hand and adjust the budget on the other hand. It has now become a classic case of borrowing from Peter to pay Paul, all under the guise of budget reprioritisation,” said Hlengwa.

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