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‘Municipal finances deteriorating’

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“Failure to approve a funded budget by municipalities will result in National Treasury withholding transfers.”

SPEECH: The Northern Cape MEC for Finance, Economic Development and Tourism, Mac Jack. Picture: Danie van der Lith

THE MEC for Finance, Economic Development and Tourism, Mac Jack, expressed serious concern over the “deteriorating state of local government finances in the Province” during his budget speech yesterday.

“This is evident by some municipalities’ failure to pay salaries and third parties as they become due and persistent negative cash flow positions reported by municipalities. The main contributing factor to this problem is the continuous approval of unfunded budgets by municipalities.”

He said the technical committee on finance had advised the budget council, which took a resolution that all municipal 2019/20 budgets including the 2018/19 adjusted budgets had to be funded.

“Failure to approve a funded budget by municipalities will result in National Treasury withholding transfers.”

Jack said Renosterberg, Ubuntu, Dikgatlong, Kai !Garib and Magareng municipalities had approved financial recovery plans.

“To ensure the implementation of these plans, Provincial Treasury will establish a financial recovery services unit that will assist municipalities in financial distress.

“Provincial Treasury is assisting municipalities to implement revenue enhancement innovations that are more technologically inclined, ensuring effective billing and revenue management processes.”

He added that Provincial Treasury was working on a project to assist municipalities with charging property rates on tribal land and state domestic facilities to improve their cash flow.

“In response to the crisis of electricity supply interruptions, Provincial Treasury continues to facilitate talks between Eskom and municipalities on the review of wheeling agreements, tariffs and payment method to affected municipalities.

“The credit control and debt management at municipalities has for a number of years been treated as a finance related function, however, the successful implementation calls for an institutional and political effort, and a clear message of zero tolerance for theft of municipal services.”

Jack stated that the introduction of a smart metering system would assist struggling municipalities to curb water and electricity losses as a result of theft.

He added that a procurement policy framework would be implemented in the current financial year, aimed at increasing local procurement to 60 percent.