Budget cuts force KwaZulu-Natal Health to cut projects amid R1.7 Billion debt
KwaZulu-Natal Health MEC Nomagugu Simelane has confirmed that her department owes services providers R1.7 billion.
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The KwaZulu-Natal Health department will cancel a number of projects to pay R1.7 billion it owes service providers.
This was announced by MEC Nomagugu Simelane-Mngadi in a joint media briefing with Premier Thami Ntuli and the executive council on Wednesday. The MEC confirmed that her department was indeed owing service providers to the tune of the said amount, however, she said her department had started paying service providers especially those who have invoices below R500 000. She said to avoid the debt accumulating further, her department has decided to cut a certain number of projects which she said the department was busy trying to identify.
The MEC further announced that she had started negotiating with service providers whom the department pays over R500 000 a month to arrange to spread their invoices for two months because the department could not meet the 30-day payment policy.
“We wish to confirm the figure of R1.7 billion that was reported that we owe service providers is correct, however, we must say we are dealing with the issue and as part of settling the debt and avoid the same situation to escalate further in this financial year, we are going to cut some projects and divert the saved funds to the payment of service providers until such time we have enough budget allocation to settle all the money owed to service providers,” said Simelane-Mngadi.
Explaining why the department fell behind in paying service providers, Simelane-Mngadi said the department did report to the premier and Treasury in November last year that because of budget cuts in the last financial year, the department would experience problems in meeting payment obligations.
There have been complaints that patients were starving in the hospitals because there was no money to purchase food.
Ntuli announced that Health and Education were the most affected departments because of their big sizes. Ntuli appealed to service providers to pay their employees and not use the outstanding payments from government not to pay their staff since that will affect the services their employees provide to government.
Ntuli said companies must save money the government has paid because the payment includes profit.
Explaining the financial challenges of the provincial government, Finance MEC Francois Rogers said the current administration inherited a R70 billion shortfall which was a result of budget cuts by the previous national government.