Report on the unauthorised expenditure by the Department on International Relations and Cooperation of R98,31 million for the 2006-07 Financial Year
FOR WRITTEN REPLY
QUESTION NO: 3242 (NW4131E)
PUBLISHED IN INTERNAL QUESTION PAPER NO: 41-2012 OF 16 NOVEMBER 2012
Mr E H Eloff (DA) to ask the Minister of International Relations and Cooperation:
(1) Whether the report on the unauthorised expenditure by her department of R98,31 million for the 2006-07 financial year is still awaiting authorisation; if not, when will the report be made available; if so, what are the relevant details;
(2) whether the unauthorised expenditure relates to (a) overspending of the Budget Vote or (b) a division in the Budget Vote; if not, what is the position in this regard; if so, what are the relevant details;
(3) whether she has implemented any measures to resolve the issue; if not, why not; if so, what are the relevant details? NW4131E
(1) The report for unauthorised expenditure of R98,31 million for the 2006-07 financial year is still awaiting authorisation.
The unauthorised expenditure relates to the overspending of the division within the Vote which resulted in the overspending of the Budget Vote. During 2006/07, South Africa conducted its international relations work through 117 resident Embassies and Consulates abroad and the spending is in foreign and other local currencies. Whilst the financial reporting currency for the department is in South African Rand, thus the department is compelled to buy foreign currencies at a spot rate which is subject to market fluctuations.
b) During the second half of the financial year, the performance of the Rand depreciated against major currencies which resulted in the increase in the expenditure incurred in the Missions abroad when interfaced to the department financial reporting system.
(2) The Department has reached an understanding with the National Treasury and acquired a Mission Cashbook System that is utilised for Missions reporting to monitor the performance of the Rand, as well as to fix the exchange rates determined by the National Treasury for budgetary purposes. Therefore, should there be a difference between the actual performance of the Rand and the budgeted rate, the allocated budget is adjusted accordingly. In the event of a depreciation of the Rand (lower than the fixed rate determined by the National Treasury) the adjustment estimate process is the only avenue available for the Department to be provided with resources to compensate for exchange rate losses. However, should either depreciation or losses of the Rand take place after the adjustment estimate process, the Department has to fund such losses from within its allocated resources or incur the unauthorised expenditure as a “compulsory” expenditure.