Role of the Central Government in the Financing of Public Institutions
According to Gildenhuys (1993:117/118) the functions of the executive authority at local government level can be summarised as follows: • To advise the local legislature (council) on its long-term objectives, to formulate a policy to attain them and to ensure that the decisions and policies of The legislature are properly executed.
• To prepare the annual budgets for approval by the local legislature. This includes drafting comprehensive programmes for the rendering of public services as well as for capital development programmes; investigation into the availability of resources; recommendations on loans, taxation and tariffs; and recommendations on the allocation of resources to competing local government services.
• To supervise the execution of budget programmes; to ensure efficiency and effectiveness in the activities of the local authority; and to report periodically to the local legislature.
Role of Political Office Bearers Responsible for Finance
The Minister of Finance He/she is a member of the Cabinet and is directly accountable to the head of state. The person in this office should have a sound knowledge of all the main government activities and also of the financial situation of the public sector. They need to be well informed about all national and international economic circumstances, and should not only be a good financial administrator, but also good political and monetary economist.
They work closely with the Governor of the Reserve Bank – the bank which lends money to private banks and acts as banker to the government. They then determine the monetary policy of the whole country. The Minister of Finance is appointed to administer the affairs of the Department of Finance and cannot excuse himself should his department not realise its goals. If the Department of Finance fails in this, the Minister of Finance is usually dismissed. Although they enjoy support from the rest of the government they often encounter much criticism from the public and the opposition, and pressure from other departmental heads who eagerly seek to satisfy the insatiable demands of their departments.
Goals of this ministry are to: • formulate and maintain a broad economy and financial policy for the state; • control financial institutions; • regulate and control government finance; • supply funds to public institutions and state departments.
Tasks and Duties of this Ministry are to: • regulate the economy through monetary and fiscal policy see next page for definition; • prepare and present the annual budget to Parliament; • administer public debt; the Minister has the authority to borrow money on behalf of government, which is done in collaboration with the central bank (Reserve Bank) to finance government debt, to obtain foreign currency and to attempt to manipulate the domestic monetary situation to create stability (see the stabilisation account below);
• control all matters of public finance; they have the authority to approve expenditure not provided for in budget, to impose and change tax rates; to determine interest rates and conditions for government loans.
See the following paragraph for an explanation of the difference between monetary and fiscal policy.
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