Gordhan meets Limpopo Premier

(Image: GCIS)

Cabinet decided to place Limpopo under a section 100 (1) (b) intervention of the Constitution in December last year following a cash crisis that saw the province deplete its R757.3m overdraft facility with the Corporation for Public Deposits (CPD), which facilitates banking arrangements for national and provincial governments and state-owned entities with the Reserve Bank.

In their meeting, Gordhan and Mathale agreed that the most pressing issue was to present a credible budget in the province within the legal time frame, ensure the payment of service providers with legitimate claims and stabilise the finances of the province, Gordhan said in a statement yesterday, Tuesday 10 January 2012.

"Today's meeting demonstrates the urgency and the common understanding of stabilising the provincial administration in the interest of protecting the integrity of government's finances and deal decisively with key weaknesses that compromise service delivery in the province," Gordhan said.

Legitimate service providers will be paid

He said they recognised the importance of key service delivery programmes in departments such as education and health, and that the authenticity of contracts and payments of these essential services would be prioritised and legitimate service providers would be paid.

"However, it is important to emphasise that the province begins to pay for goods and services based on the available cash in the bank, categorise and prioritise their suppliers in order to manage the available cash," the minister added.

Cabinet had asked Gordhan to intervene after Limpopo requested that their overdraft facility be increased by R1bn (to R1.7bn) from the National Treasury for the province to pay salaries and wages on 23 November 2011.

This request was declined but alternative arrangements were made for an early transfer (two days before the actual date of transfer) so the province could pay salaries.