National Treasury has released local government\u2019s revenue and expenditure data for the first quarter of the 2017\/18 financial year, showing the billions in debt owed to municipalities<\/p>\n
The report covers the first quarter of the municipal financial year ending on 30 September 2017.<\/p>\n
It showed that aggregate municipal consumer debts amounted to R143.6 billion (compared to R128.4 billion reported in the fourth quarter) as at 30 September 2017. A total amount of R140.1 million, or 0.1%, has been written off as bad debt.<\/p>\n
Government accounts for 5.7%, or R8.2 billion (R7.4 billion reported in the fourth quarter of 2016\/17). The largest component relates to households which account for 70.8%, or R101.6 billion (64.8% or R83.1 billion in the fourth quarter).<\/p>\n
Treasury pointed out that not all the outstanding debt of R143.6 billion is realistically collectable, as these amounts are inclusive of debt older than 90 days (historic debt that has accumulated over an extended period), interest on arrears and other recoveries.<\/p>\n
If consumer debt is limited to below 90 days, then the actual realistically collectable amount is estimated at R31.9 billion, it said.<\/p>\n
The report found that Metropolitan municipalities are owed R72.8 billion (R64.9 billion reported in the fourth quarter) in outstanding debt as at 30 September 2017. This represents an increase of R7.9 billion when compared to the previous quarter\u2019s publication.<\/p>\n
The largest contributors are the City of Johannesburg, which is owed the largest amount at R18.8 billion, followed by Ekurhuleni Metro at R14.4 billion, City of Tshwane at R10.9 billion, and eThekwini at R9.3 billion.<\/p>\n
Households in metropolitan areas are reported to account for R55.3 billion, or 76%, of outstanding debt to metros, followed by businesses, which account for R13.9 billion or 19.1%. Debt owed by government agencies is approximately R1.9 billion, or 2.6%, of the total outstanding debt owed to metros.<\/p>\n
The report showed that on average, municipalities spent 18.5%, or R77 billion, of the total adopted budget of R416.9 billion as at 30 September 2017 (first quarter results for the 2017\/18 financial year). In respect of revenue, aggregate billing and other revenue amounted to 23.8%, or R98.5 billion, of the total adopted revenue budget of R413.2 billion.<\/p>\n
Of the adopted operating expenditure budget amounting to R346.3 billion, R69.6 billion or 20.1% was spent by 30 September 2017.<\/p>\n
Municipalities have adopted the budget for salaries and wages expenditure at R111.1 billion, which is R18.6 billion more than the adjusted budget of R92.5 billion for the 2016\/17 municipal financial year.<\/p>\n
This constitutes 32.1% of their total operational expenditure budget of R346.3 billion.<\/p>\n
In the period under review, capital expenditure amounted to R7.4 billion, or 10.5%, of the adopted capital budget of R70.6 billion. This is significant underperformance for the first quarter.<\/p>\n
Aggregated year-to-date total expenditure for metros amounted to R48.4 billion, or 20.1%, of their adopted budget expenditure of R241.3 billion. The aggregated adopted capital budget for metros in the 2017\/18 financial year is R37.9 billion, of which 8.3%, or R3.1 billion, has been spent as at 30 September 2017.<\/p>\n
When billed revenue is measured against their adopted budgets, the performance of metros shows surpluses across all four core services for the first quarter of 2017\/18.<\/p>\n
This does not take into account the collection rate:<\/p>\n
As at 30 September 2017, aggregated revenue for secondary cities is 23% or R13.4 billion of their total adopted budget revenue of R58.4 billion for the 2017\/18 financial year. The year-to-date operating expenditure level of the secondary cities is 16.5% or R9.8 billion of the total adopted operating budget of R51.4 billion for the 2017\/18 financial year, Treasury said.<\/p>\n
Capital spending levels are low at an average of 9.6% or R746 million of the adopted capital budget of R7.8 billion.<\/p>\n
The performance against the adopted budget for the four core services for the secondary cities for the first quarter 2017\/18 also shows surpluses against billed revenue without taking into account the collection rate:<\/p>\n
Secondary cities are owed R29.3 billion (R27.2 billion reported in the fourth quarter of 2016\/17) in outstanding consumer debt. The majority of debt is owed by households, which amount to R19.2 billion, or 65.6%, of the total outstanding debt. Out of the total debt of R29.3 billion, R24.2 billion, or 82.6%, has been outstanding for more than 90 days.<\/p>\n
Municipalities owed their creditors R42.9 billion as at 30 September 2017, an increase of R8.3 billion when compared to the R34.6 billion reported in the first quarter of 2016\/17.<\/p>\n
The Free State has the highest percentage of outstanding creditors greater than 90 days at 85%, followed by Limpopo at 76.4%, and the North West at 71.3%.<\/p>\n
The aggregated year-to-date actual collection rate is 81.2%, compared to an adopted budgeted collection rate of 90.3%. This represents an aggregated under-performance of 9.1%. “It is suspected that the reported collection rate is distorted, owing to reporting inconsistencies on cash flow movements of municipalities, Treasury said.<\/p>\n
The total balance on borrowing for all municipalities equates to R68.5 billion as at 30 September 2017.<\/p>\n