Borrowing Powers of Provincial Governments Act

1. In this Act, unless the context otherwise indicates- (i) "bridging finance" means funds raised during a financial year in the Republic and denominated in rand to finance current expenditure in anticipation of the receipt of current revenue during that particular financial year, and includes an overdraft on a bank account which the provincial government concerned has opened in terms of its Exchequer Act; (xii) 5 (ii) ·"capital expenditure" means any payment by a provincial government for the 10 , ·procurement of· new or existing·· tangible or· intangible assets with a value higher than a prescribed value and with a normal life expectancy of more than one year, and includes~; . (a) payment for the acquisition of goods and services for the purpose of , .. improving, prolonging the expected·working life of, and rebuilding or 15 reconstructing an existing fixed asset; the granting and payment of a money loan of which the proceeds will be (b) a capital transfer to another person or body; . (c) · (d) any other expenditure which is from time to time classified by regulation 20 ' used by the recipient of such a loan for capital expenditure; · · ' ' · (e) as a capital expendit_ure; . the repayment of an outstanding loan which is due for redemption or . ,conyersion, provided that the proceeds of such conyersion shall be used . · .for the financing of expenditurescontemplated in subparagraphs (a), (b); (c) and (d), . . . ; ·· 25 but excludes a payment by a provincial government in connection with the .· normal maintenance of a capital asset . intended to keep such asset '.in its (iii) original state of repair; ( v) · "capital revenue" means all income of a provincial government, other than a loan, intended for the financing of capital expenditure and includes proceeds 30 from the sale of capital assets; (iii) 4 No. 17476 Act No: 48, 1996 GOVERNMENT GAZETTE, 4 OCTOBER 1996 BORROWING POWERS OF PROVINCIAL GOVERNMENTS ACT, 1996 (iv) "capital transfer" means a·non-repayable, unrequited payment to, through or· by a provincial government for the purpose of financing capital expenditure; (iv) ."Commission" means the Financial and Fiscal Commission established by .(v) ... section 198 of the Constitution; (vii) 5 (vi) "Committee" means the Loan Co-ordinating Committee referred to in section 2; (vi) (vii) "current expenditure" means any payment by a provincial government which is not a capital expenditure; (x) (viii)·, "current revenue" means all income of a provincial government, other than- 10 · (a)· receipts from bridging finance and loans; (b) ·receipts of capital .revenue; and receipts of capital transfers; (ix) (c) (ix) "financial year" means the period from 1 April in any year to 31 March in the next succeeding year; (i) . · , · , (x) "interest incurred during a financial year" includes the gross amount of any .• finance charges, discounts or premiums attributable to that financial year, irrespective of whether· such interest is deferred, paid in advance, or is calculated with reference to a fixed or variable rate of interest or in any other manner; (xiii) · 15 20 (xi) "loan" means money borrowed to finance a capital expenditure; (viii) (xii) "Minister" means the Minister of Finance; (xi) (xiii) "prescribed" means prescribed by regulation; (xv) (xiv) "responsible member" means the member of the Executive Council of a provincial government who is responsible for the financial affairs of the 25 province concerned and who. acts,. for. purposes of this Act, on behalf of that government; (xiv) (xv) "this Act" includes the regulations. (ii) Loan Co-ordinating Committee 2,,There is hereby established a Loan Co-ordinating Committee-:- . . (a). which . shall consist of the Minister,' as chairperson, and. the responsible 30 member of each province, or his or her duly authorised representative; and (b) which shall during a financial year co-ordinate the borrowing requirements of provincial governments, after taking into account estimates of the aggregate demand for capital market funds during that year; and . . .(c). which shall in itsdeliberations take'accountofthe total debt of each provincial 'government and the bodies controlled by it and of their contingent liabilities, risks, and ability to service their debt, and which shall report thereon to the Commission in a manner which will allow the Corrimission to effectively fulfil Ljts functions in terms of section 157(3) of the Constitution.· ' . ' . . - ' ' ' : ' . . ' , ~ ' . 35 40 ' - Borr:owi~g powers of provinces. behalf of a provincial government. . . . 3: (1) N~person or body oth~r than the responsible member may borrow moneys on . • (~)A departn1entofor.a body est~blish~d by a provindalgovemment may only with , . .. . · the''written approval of the responsible member accept financial assistance from any 45 person: other thiu1 the national government. ' . , (3) A provincial government shalCnot commit itself to any financhil product, other than bfidging 'finance, Ipans 'or such other product as may be prescribed, which creates an interest or any other exposure or a financial or equivalent kind .. . . . . . .· . . ,.. . ' . · . . (4) Bridging finance shall.not be raised by a provincial government as a continuous 50 . and unlimited reyolying credit. . ' (5) Tjl~ responsible member shall not obtain loans denominated ~n a foreign currency by the issue of marketable financial instruments or incur a liability or risk payable in a foreign currency otherwise than in terms of subsection(6)(d). .. . (6) The' responsible member may during a financial year rai~e loam to finance an 55 !,:Xpected loan requirement_ which shall be. determined in· accordance with section 4(b)(v~): Pro.~idedthat-:- · : . ·. ' , ·· > · · · · ". ' .. · ·: ,. . .. · . " , · · · .·· · · ' .• ' . . ' • • I • ' ' • -. • ,_. • •' •' • ''!. -.' ! : 6 No. 17476 Act No. 48, 1996 GOVERNMENT GAZETIE, 4 OCfOBER 1996 BORROWING POWERS OF PROVINCIAL GOVERNMENTS ACf, 1996 . (a) · (b) (c) . the aggregate amount of loans to be raised by each provincial government • during that financial year has been considered and consensus thereon has been reached by the Committee and the Commission has been informed by the Minister in writing of such consensus having been reached; if the Committee cannot reach consensus on the aggregate amount contem- plated in paragraph (a) within 21 days after being tabled for discussion for the first time at a meeting of the Committee, the Minister, who may request a recommendation from the Commission on the matter, shall determine the aggregate amount that may be borrowed by each provincial government, and he or she shall make public the reasons for such determination; the total amount of outstanding loans raised by the responsible member in . . terms of this section during such financial year shall, notwithstanding paragraphs (a) and (b), at no time exceed the expected loan requirement by more than half a per cent; 5 lO (d) subject to subsection (5), loans denominated in foreign currency may be 15 · raised only- · . · . (i) with the· approval of the Minister and subject to the conditions determined by him or her;. and (ii) . after" the reasons for the conclusion of such a loan have been fully motivated by the responsible member to the Minister and to the 20 Commission; and . (iii) : if the Minister, after recommendations of the Commission on the matter have been considered, is satisfied that the conditions of such a loan comply with the generally accepted principles of loan agreements and . . · the conclusion of the loan is in the public interest; . . · 25 (e) ·loans raised in the Republic and denominated in rand shall, subject to this Act, be obtained by a provincial government- . (i) through the conclusion of loan agreements with the national government, with the concurrence of the Minister, and the Minister may advise the provincial government to raise a loan in terms of subparagraph (ii) or 30 (iii); or . . through ·an institution . established by an . Act of Parliament, ·or· an · ·· · · institution approved by the Minister, to conclude loans and make loans to . . . . . . . . · .. (ii) : sub national governments; or . . . 1 (iii) by~ . "' • ' . . •· . . . ' • ' • . . . . . . . 35 ( aa) entering into loan agreements with banks or financial institutions; or (bb) making issues of public stock and bmi.ds; or ( cc) entering into loan agreements through the issue of financial · instruments, · . . on such terms and conditions as the responsible member may deem fit, and he 40 . or she may furnish any security required. . (7) (a) The total expected amount of interest incurred during a financial year by a provincial government on its expected outstanding debt at the end of that financial year, shall not exceed an amount equal to a percentage~ . . . . . . . (i) of the total budgeted current revenue of that provincial government, recorded 45 in terms of section 4( a)(i); and , (ii) rumually deteirnined for each provincial government by the Minister, ~ho may request a recommendation in this connection from the Coni.inission. .· ' ' · · . ' · · (b) The Minister shall milke public the reasons for the determination contemplated in paragraph (a). · · (8) Any moneys borrowed by the responsible member, and the interest thereon, shall be ,th.e finru!Cial obligation of the provinCial government' concerned .and shall be chargeable to_and payable from the_ revenues, and assets. of that provincial government. statements or curreni .. and capital tr'ansactio~s. · . . 4. :Every i>rovindal; gov~~ment shall for. each . finanCial y~~ •. in respect or all its 55 budgeted arid actual transactions,' make provision in its books of account' for~ . . ' . (a)" a statement, which shall be called the statement of current transactions, in a · ' ' · 50 · · ·.- t prescribed form, which shall on a cash basis record-:- . · · · (Q ~e affiounts o(all current r~venuereceived by the, provincial govern- ment concerned in terms of any law or otherwise; 60 (ii) all amounts- · 8 No. 17476 Act No. 48, 1996 GOVERNMENT GAZETTE, 4 OCTOBER 1996 BORROWING POWERS OF PROVINCIAL GOVERNMENTS ACT,.1996 (aa) of current expenditure with which the provincial government is charged in terms of any law; (bb) recorded in terms of paragraph (a)(i) as current revenue and which have been made available by the legislative authority of the province concerned for the financing of capital expenditure; and 5 (iii) . the amounts- .• (aa) of receipts from bridging finance; and (bb) in respect of the repayment of brldging finance; and . (b) a statement, which shall be called the statement of capital transactions, in a · prescribed form, which shall on a cash basis record-:- . (i) .. the amounts of- ( aa) capital revenue; (bb) current revenue' recorded in the statement contemplated in para graph (a) and which has been made available by the legislative authority of a province for the financing of capital expenditure; and 15 . '(cc) receipts of capital transfers; . . . 10 (ii) all expenditures and amounts with which the provincial government is charged in terms of any law and which are capital expenditure; (iii) outstanding loans which are due for redemption or conversion; (iv) proceeds from loans; the excess of- (v) (aa) the. total amount recorded in terms of sub~aragraphs (i) and (iv), 20 over (bb) the total amount recorded in terms of subparagraphs (ii) and (iii), and which excess 'shall be referred to as the capital surplus for the 25 financial year concerned; and ' the difference between- ( aa) the total amount of budgeted appropriations for that financial year recorded in terms of subparagraph (ii),' together with the budgeted . . amounts recorded in terms of subparagraph. (iii), and . 30 (bb) the total of the budgeted amounts recorded in terms'of subparagraph (i), together with the amount of the capital surplus for the irimiediately preceding finanCial year, . and which difference. shall be referred to as . the expected loan requirement for the financial year concerned. 35 (vi) Guarantees 5. (1) Notwithstanding anything to the contrary in this or any other law, no guarantee shall be furnished by the national government in respect of the fulfilment of a financial commitment incurred or to be incurred by a provincial government pursuant to the raising of bridging finance or conclusion of a loan denominated in rand.· · (2) Notwithstanding anything· to the contrary in this or any other law, a guarante~ by the national government in respect of the fulfilment of a financial commitment incurred or to be incurred tiy a provincial ·government pursuant to the conclusion by the responsible member of a loan denominated in a foreign currency may be furnished only iri terms of a national Exchequer Act. · · · · ' ' · . · 40 45 (3) All documents issued in respect of the incurring by a provincial government of a· financial commitment, shall prominently contain a statement indicating whether or not such a financial commitment is guaranteed by the national government. ;;, . ' :,.· .. ·, .. : \ . ... . . :' .. Signatories to documents 6. (1) Loans or agreements entered into in terms of section 3(6)(d), (e)(i), (e)(ii) and 50 (e)(iii)(aa) and securities issued in terms thereof shall be signed by the responsib~e member of the provinCial government concerned. · · · · • · · · .. (2) Financial instruments other than those, referred to in subsection (1), issued by a provincial government: shall be signed by the officer responsible for the administration of the financial affairs of the provincial government concerned or a person authorised 55 thereto by him or her in wri~ng. · · · · ·. 10 ·No. 17476 Act No. 48; 1996 Regulations GOVERNMENT GAZEITE, 4 OCTOBER 1995 BORROWING POWERS OF PROVINCIAL GOVERNMENTS ACT, 1995

7. The Minister may, after consultation with the responsible members, make regulations regarding- ( a) any matter which in tenns of this Act is required or permitted to be prescribed; (b) disclosure requirements in respect of the borrowing operations of provincial 5 governments; and (c) generally, any matter which the Minister' deems necessary or expedient to . , prescribe in order to achieve the objects of this Act. '· Short title

8. This Act shall be called the Borrowing Powers of Provincial Governments Act, 10 1996. .