ACTING Auditor General, Monica Besetsa, has warned that the government could be blacklisted by its suppliers for its failure to pay them on time.
The government’s outstanding payments to suppliers shot up by 12 percent to M544 million during the 2020/21 financial year, according to the latest audit report by Ms Besetsa.
She cautioned that the continued payment delays to suppliers could push them into stopping to do business with government or inflating their prices to the detriment of the government purse.
“The payment obligations on government to individuals, suppliers, lenders or contractors that were due for settlement as at 31 March 2021 totalled M544 million,” Ms Besetsa said.
“The bulk share of arrears of M497 million, or 91 percent, was owed to suppliers. Arrears on compensation of employees and on pension and gratuities represented eight percent and one percent of the total arrears respectively.
“In my last report, I commended the Minister of Finance for fulfilling his commitment to reduce the payment arrears, as there was a significant decline of 41 percent from M828 million as at 31 March 2019 to M488 million at 31 March 2020. Unfortunately, for the year under review, there were negative results as there was an increase of 12 percent from M488 million to M545 million in 2020/21.”
Ms Besetsa warned that the government’s failure could lead to it being denied services by service providers.
“A continuing pattern of payments in arrears will likely trigger some sort of restrictive action, such as stopping business with government and inflation of prices way above market ones,” she said.
The issue of payment delays has dogged the government for several years now.
In 2018, then Finance minister, Moeketsi Majoro revealed that government owed service providers about M1, 1 billion.
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“Due to lack of adequate cash, the government has accumulated payment arrears amount to M1, 1 billion, which included payments going back to April 2018. The prolonged accumulation of payment of arrears could have a devastating impact in business and bank balance sheets as suppliers fail to service their loans and retain employees and their businesses,” Dr Majoro said.
In 2019, deputy Accountant General Hlompho Matsoso revealed that the government had an outstanding supplier debt of M1 billion.