On Wednesday Moody’s dealt Mangaung’s dreams of attracting foreign investment a severe blow, moving the metro’s rating three places down the junk status scale from Ba3 to B3. According to Moody’s the downgrade is a reflection of the municipality’s weak and declining liquidity position and means there is a high risk the municipality will not be able to fulfill its obligations.

This has already been seen in Mangaung’s inability to settle its outstanding debt to Bloem Water, resulting in threats of water cuts from the water board and a subsequent battle between the parties in the Bloemfontein High Court. Mangaung has until mid-August to make a part payment on the debt otherwise residents in Bloemfontein, Thaba’Nchu and Botshabelo may be at risk of water-shedding.

Moody's also gave the municipality a negative outlook as there is great uncertainty that Mangaung will be able to improve its financial performance.

Opposition parties have been highly critical of the metro following the announcement of the downgrade, blaming the ANC for the position the metro finds itself in.

In June 2019, OFM News reported the Free State Department of Public Works currently owes Mangaung R500 million for services rendered. There was a settlement offer which included a R 110 million write-off on the cards to be discussed in council in June, but the matter was mysteriously removed from the agenda.

Mangaung was one of nine municipalities in the Free State that failed to submit financial statements in time for inclusion in the Auditor-General’s 2017/18 municipal audit report. AG, Kimi Makwetu reveals that Mangaung’s audit outcome was still outstanding by the cut-off date for the report - the only metro out of eight, that failed to submit on time. Makwetu says in the report that this is due to the late submission or non-submission of financial statements on the part of the municipalities.

OFM News