The current crisis has created substantial expenditure needs which could not have been foreseen at the time of preparing and passing of the 2013/2014 annual budget. The recurrent costs requirements of the army have increased significantly, while the displacement of almost a million people and the destruction of their assets and property have created a huge demand for humanitarian support and relief. Even with a ceasefire, expenditure needs in these areas will be significantly higher than planned for the remainder of the financial year.
This year’s budget prioritised development expenditures in a number of areas identified by H.E. the President – road construction, service delivery and long-term food security. It is proposed that all expenditures in these areas which are not critical to transition from the crisis are cut for the remainder of the financial year, to enable a re-allocation of resources to security and humanitarian spending. An amount of SSP: 748,795,600 has been identified to cater for these. Pending contractual commitments that are not immediately essential to the transition will be suspended and an Arrears Fund will be created in the FY 2014/15 Budget to cater for them.
In order to fast-track the re-allocation process, which could otherwise delay the preparation of the forthcoming 2014/15 budget, it is proposed that re-allocations are made in two ways:
- A portion of the re-allocated funds are allocated directly to the recurrent budget of the army amounting to SSP: 500,000,000 based on the available resources identified.
- The remainder is allocated to a Contingency Fund for Emergencies, to cater for humanitarian needs during the remainder of the financial year. The amount is SSP: 248,795,600
The establishment of a Contingency Fund for Emergencies in the annual budget is based on Article 23 of the PFMAA. The PFMAA states that spending from the Contingency Fund shall be authorized by a resolution of the Council of Ministers. The Minister of Finance has to report to the National Legislature on the use of Funds from the Contingency Fund within 3 months of expenditure. The rules governing the use of the Contingency Fund will be set out in the Supplementary Appropriation Act.