The information indicated which municipalities were potentially unable to honour their financial commitments
A TOTAL of 22 municipalities in the Northern Cape have unfunded budgets and are not likely to be able to pay their total creditors within the prescribed 30-day period.
According to a parliamentary reply, the municipalities owe a total of R1.098 billion, while their cash and equivalents amount to only R239 million.
In his reply to Kevin Mileham from the DA, the Minister of Finance, Nhlanhla Nene, said that the information related to the second quarter, ended December 31 2017, and indicated which municipalities were potentially unable to honour their financial commitments.
“When matching ‘cash and cash equivalents’ for this period against the ‘total creditors’ for the same period, it showed that municipalities with unfunded budgets are not able to pay their total creditors within the prescribed thirty-day period,” the reply from the minister stated.
The development and adoption of financial recovery plans is the primary responsibility of a municipality facing financial challenges. The municipality is able to request support for the development of a financial recovery plan from their province and National Treasury.
“Where such requests are received from municipalities, the financial recovery plan is developed by National Treasury in consultation with the relevant Provincial Treasury and the municipality.”
He added that financial recovery plans were mostly prevalent in the North West, Limpopo and Northern Cape.
Some municipalities in the Northern Cape have negative cash reserves, for example Ubuntu, which has a cash reserve of -R10.7 million but owes creditors R49 million. Thembelihle has cash reserves of -R2.7 million and a creditors balance of R65.8 million and Tsantsabane has cash reserves of -R1.5 million and a creditors balance of R126 million.
Nama Khoi owes its creditors R190.65 million and has a cash reserve of R11.4 million, while Magareng, which has cash reserves of R13 million, owes R119.9 million. Siyacuma owes R102 million, alhtough its reserves total only R5.9 million.
Other municipalities in the Province that have unfunded budgets include John Taolo Gaetsewe, ZF Mgcawu, Kamiesberg, Hantam, Khai-Ma, Renosterberg, Siyathemba, !Kai Garib, !Kheis, Tsantsabane, Kgatelopele, Dawid Kruiper, Dikgatlong, Phokwane, Joe Morolong, Ga-Segonyana and Gamagara.
Only three, namely Ubuntu, Renosterberg and Dikgatlong have approved financial recovery plans, while two (Nama Khoi and Magareng) are still being considered.
In his reply, Nene stated that he would consult with the minister of Co-operative Governance and Traditional Affairs for support of appropriate interventions.