{"id":761389,"date":"2024-03-18T15:51:37","date_gmt":"2024-03-18T13:51:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=761389"},"modified":"2024-03-18T15:51:45","modified_gmt":"2024-03-18T13:51:45","slug":"treasury-flags-big-problems-at-municipalities-including-a-r30-billion-jump-in-debt","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/761389\/treasury-flags-big-problems-at-municipalities-including-a-r30-billion-jump-in-debt\/","title":{"rendered":"Treasury flags big problems at municipalities – including a R30 billion jump in debt"},"content":{"rendered":"\n

The underspending of grant allocations, accumulating customer and municipal debt, and inadequate progress in revenue collection across South Africa’s 257 municipalities remain a cause of concern for the National Treasury.<\/p>\n\n\n\n

This was outlined by the Treasury discussing the recently released Local Government Revenue and Expenditure report <\/a>for the second quarter of the 2023\/24 financial year (up until 31 December 2023).<\/p>\n\n\n\n

Municipal spending<\/strong><\/p>\n\n\n\n

Municipal spending on both operating and capital budgets accounted for 46.3%, or R283.5 billion, of the total approved expenditure budget of R612 billion. <\/p>\n\n\n\n

Revenue from billing and other sources reached 50.3%, or R310.9 billion, of the total approved revenue budget of R618.5 billion.<\/p>\n\n\n\n

Municipalities also set aside R154.5 billion for salaries and wages. This marks a R7.9 billion, or 5.4%, rise from the R146.6 billion budget allocated for the 2022\/23 municipal financial year. By 31 December 2023, R72.8 billion, or 47.2% of the allocated budget for salaries, had been used.<\/p>\n\n\n\n

Treasury warned that grave underspending in this regard could have dire consequences on respective municipalities, especially in terms of councils fulfilling their service delivery mandates.<\/p>\n\n\n\n

Underspending grants<\/strong><\/p>\n\n\n\n

Regarding conditional grants as of December 31, the Treasury said R27.8 billion or 63.5% of the R43.7 billion allocated to municipalities had been transferred to local councils for 2023\/24.<\/p>\n\n\n\n

Looking at four grants (the\u00a0Municipal Infrastructure Grant,\u00a0Integrated Urban Development Grant Water, Municipal Disaster Recovery Grant\u00a0and the Public Transport Network Grant), these all have a spending performance of below 50% (between 25% – 49.3%).<\/p>\n\n\n\n

Treasury said that low expenditure on grants “is a source of concern because this slow performance may eventually lead to unspent conditional grants that have to revert to the National Revenue Fund (NRF).” <\/p>\n\n\n\n

“The surrendering of unspent conditional grants to the NRF has negative consequences to the communities that must receive the services linked to the infrastructure to be built,” added Treasury.<\/p>\n\n\n\n

Notably, Gauteng’s metros are some of the municipalities that have received warnings over their underspending of grant allocations – with Treasury threatening to cut the funds.<\/p>\n\n\n\n

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Joburg and Tshwane face massive funding cuts<\/a><\/blockquote>