Gauteng underspends budget but says R1.8bn not lost

The Gauteng Provincial Treasury has confirmed that about R1.8 billion was returned to the National Treasury due to underspending in its annual budget, mainly from the health and education departments.

Gauteng Finance and Economic Development MEC Lebogang Maile confirmed on Monday that the total underspending amounted to R1.799 billion; however, the notion that this money is lost is a “misunderstanding”.

“The concern that the underspent resources will no longer be available or that they are lost by the Gauteng Provincial Government is a misunderstanding that necessitates clarification,” he said.

Gauteng underspent R1.8 billion

The Gauteng Provincial Government’s final budget for the 2024/2025 financial year was R168.76 billion. By year-end, it had spent R166.97 billion, which is 99% of the budget.

The total underspending was R1.799 billion, of which R1.041 billion (58%) came from the Departments of Health and Education. The remaining R769 million (42%) came from all other departments combined.

Conditional grants accounted for R381.51 million of the R1.799 billion underspent, while the Provincial Equitable Share (PES) accounted for R1.418 billion.

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Conditional grants are funds given by the National Treasury to provinces or municipalities for specific projects or services. Conditional grants must be used according to detailed conditions outlined in law.

Provincial Equitable Share (PES) is a portion of the national revenue shared with all nine provinces based on factors like population and poverty levels. Provinces use it to fund services like health, education, and social development.

Unlike conditional grants, this money can be spent more freely within the province’s responsibilities.

Most departments used 95% or more of their budget

Most departments utilised 95% or more of their budget, according to the department’s expenditure breakdown.

Departments like Infrastructure, Roads and Transport, the Office of the Premier, and Department of Education spent 100% of their budgets. The Gauteng Provincial Legislature had the lowest spend at 93% of its allocated funds.

Breakdown of expenditure by departments:

The Gauteng Provincial Treasury says that once the financial year ends, it reviews all unspent funds to decide what can be kept and used in the next year.

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This includes verifying how much has been spent and how much remains as of 31 March 2025; identifying which of the unspent funds are committed to specific projects and which are unallocated; addressing any outstanding payments or invoices with appropriate documentation; and for infrastructure projects, providing clear details regarding tenders, costs, and payments that are still due.

If conditional grants are not spent by year-end, they usually return to the National Treasury.

However, the province can apply for a rollover (permission to keep the money for the next year) — but only if they provide solid proof that the funds are committed to ongoing projects.

R295.67m underspent conditional grants funds applied for rollover

Of the R381.51 million underspent in conditional grants, R295.67 million was applied for rollover, and R85.85 million will go back to the National Revenue Fund because the departments couldn’t justify keeping it.

In terms of PES funds, the R1.418 billion underspent here will undergo a strict internal process in Gauteng to determine whether it should be rolled over.

“Above all else, this process aims to ensure that service delivery imperatives are realised,” the department said.

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The Gauteng Provincial Treasury says it must legally pay all service providers within 30 days of getting an invoice, as required by the Public Finance Management Act (PFMA).

This rule helps ensure that businesses, especially small and medium enterprises (SMMES), are paid on time and can continue to run smoothly.

9 of 14 departments paid invoices on time

At the end of the 2024/2025 financial year, nine out of 14 departments paid 100% of their invoices on time.

These include the Office of the Premier, Roads and Transport, Community Safety, Human Settlements, Economic Development, e-Government, Sports and Culture, Cooperative Governance, and the Provincial Treasury.

Social Development paid 98% on time, Infrastructure Development paid 88% (excluding client departments), Agriculture and Rural Development paid 71%, Education paid 80%, and Health paid a mere 21% of its invoices within 30 days.

The government recognised the issue and committed to improving tools and systems to enhance payment times. It aims to comply with the law, bolster the economy, and support businesses that rely on these payments.

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The Gauteng Provincial Treasury concluded that if a department fails to properly account for its funds, it must return the money to the Provincial Revenue Fund, though this money is not lost.

The provincial government keeps all provincial income, such as taxes and national transfers, in the Provincial Revenue Fund (PRF), its main account. Money from this fund can only be used following strict rules and legal procedures.

“Service delivery is a top priority for the Gauteng Provincial Government. For this reason, we remain committed to ensuring that underspent funds are reallocated to crucial programmes and projects in order to ensure that the residents of our province continue to receive the necessary public services needed to alleviate the triple challenges of poverty, unemployment and structural inequalities,” the department said.