The minister of finance should be obliged to table a report in parliament when he approves or refuses a guarantee for a state-owned entity and should give reasons for his decision.
DA MP Alf Lees made the proposal on Tuesday in a private member’s bill, the Public Finance Management Amendment Bill.
A government guarantee is a contingent liability and is an obligation by the government to pay the debt of a state-owned entity in the event that it defaults on its debt obligation. The government has guaranteed the debt of several struggling state-owned enterprises including Eskom, Denel, SAA, Land Bank and Transnet.
The 2022 Budget Review noted that government guarantees came to R577bn, with Eskom responsible for R332bn and independent power producers for R157bn.
Briefing parliament’s finance committee on his bill on Tuesday, Lees said such a legislative provision would enhance parliamentary oversight of the fiscus and ensure the transparency of decision-making on guarantees, which is the responsibility of the finance minister.
The minister should be obliged to report to parliament on his/her decision on a guarantee, security or indemnity, the name of the beneficiary, the terms and conditions attached to it and the reasons for the decision within 30 days.
Now, the public only learns about government guarantees by way of answers to parliamentary questions by MPs or annually in the Budget Review, which is tabled in parliament by the finance minister when the national budget is tabled.
“We believe that there must be some form of oversight given to parliament in the process of the minister of finance either agreeing or disagreeing to government guarantees,” Lees said. Parliament could also take a view as to whether further guarantees should be approved.
“The DA believes that there must be complete transparency in the issuing of guarantees and that parliament must be given the opportunity to at the very least be aware of the mounting risks.”
Lees said consideration has been given to parliament having the right to reject a guarantee but he decided against this as he did not want to impose a stumbling block when a guarantee is urgently needed by a state-owned entity. Parliament should not be involved in operational issues.
DA MP Ghaleb Cachalia briefed the committee on his proposed amendment to the Public Finance Management Act which provides that the annual report, financial statements and audit report of a department or entity must be tabled in the National Assembly or provincial legislature by the executive authority within one month of the accounting officer having received the audit report.
If this is not done within six months of the end of the financial year, the executive authority must table a written explanation why this has not happened.
“The act does not provide for additional measures in instances where such reports and statements are not tabled and the department or public entity is not required to table such reports and statements within a specified time period after a written explanation has been tabled,” Cachalia said.
His amendment proposes that the annual report, financial statements and audit report must be tabled within 60 days after a written explanation is tabled.
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