South Africa warned that rising municipal debt poses a growing threat to public finances, as the amount owed by financially distressed town councils continues to climb and local government elections loom, and said a legislative overhaul is underway to address the problem.<\/p>\n\n\n\n
Debt owed by municipalities to creditors increased 19% to R185.2 billion in the year through June, the National Treasury\u2019s medium-term budget policy statement released Wednesday shows. <\/p>\n\n\n\n
The weakening finances of local and provincial governments were identified as a key fiscal risk.<\/p>\n\n\n\n
The financial and operational performance of many municipalities was unsustainable, Finance Minister Enoch Godongwana said.<\/p>\n\n\n\n
\u201cIt affects the delivery of basic services,\u201d he said. \u201cIt undermines economic activity. And it erodes public confidence.\u201d<\/p>\n\n\n\n
The warning came just two weeks before a vote that will serve as a barometer of public anger over the slipshod provision of water, electricity and other basic services by municipalities that have been dogged by mismanagement and inadequate financial controls.<\/p>\n\n\n\n
The deterioration in their finances also poses risks for state-owned companies. <\/p>\n\n\n\n
Overdue municipal debt owed to the power utility Eskom alone climbed to R122.5 billion by 31 August, according to Electricity Minister Kgosientsho Ramokgopa. <\/p>\n\n\n\n
Eskom has warned the figure could swell to R300 billion within five years if the problem remains unresolved.<\/p>\n\n\n\n
The Treasury said financial distress across the public sector could spill over onto the national balance sheet, because Eskom and other entities may require additional funding and guarantees. <\/p>\n\n\n\n
The power utility has already received R220 billion of a R230 billion debt-relief package announced in 2023 to help stabilise its finances after its borrowings ballooned.<\/p>\n\n\n\n
To contain growing municipal debt and limit broader fiscal risks, the Treasury is proposing the first major overhaul of the Municipal Finance Management Act in more than two decades. <\/p>\n\n\n\n
The reforms will make officials and politicians personally liable for irregular spending, empower the Treasury to appoint municipal chief financial officers and compel councils to account for unfunded budgets.<\/p>\n","protected":false},"excerpt":{"rendered":"
Municipal debt poses a growing threat to South Africa’s economy, according to Enoch Godongwana.<\/p>\n","protected":false},"author":59,"featured_media":647775,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2113278966098198722","_sma_facebook_post_id":"191437357620492_2245569649596767","_sma_instagram_post_id":"18103578416266880","_sma_x_attempts":1,"footnotes":""},"categories":[23],"tags":[17448,1164,19021],"class_list":["post-881062","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-enoch-godongwana","tag-eskom","tag-municipal-debt"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/881062","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=881062"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/881062\/revisions"}],"predecessor-version":[{"id":881074,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/881062\/revisions\/881074"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/647775"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=881062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=881062"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=881062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}