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Mangaung to attend to issues after Moody’s downgrade

───   KATLEHO MORAPELA 13:14 Tue, 13 Aug 2019

Mangaung to attend to issues after Moody’s downgrade | News Article

The Mangaung Metro Municipality says it is set to convene an urgent meeting with all its senior officials and chart a way forward following the downgrade by Moody’s Investors Services.


The municipality, which was placed three notches deeper into junk territory last week, is said by the rating agency to reflect a metro that is in a rapidly declining liquidity position.

Municipal spokesperson, Qondile Khedama, in a statement says they noted with concern the adverse report by the rating agency but the situation is not dire as they are still able to attend to their “mandates”. He says they are able to meet deadlines in terms of salary payments, contributions to third parties and provision of services.

OFM News’ Katleho Morapela reports that Khedama’s response on the stance of the municipality nonetheless comes amidst mounting questions as to whether the municipality will be able to carry out the Bloemfontein High Court’s judgment on their payment to Bloem Water.

When the municipality took its water board to court last month after Bloem Water threatened to impose water restrictions and supply the municipality with only 30% of its bulk water supply due to non-payment, it was ruled that the municipality must make a partial payment on their outstanding debt before August the 17th. With just a few days left before this date, questions are mounting as to whether the metro will indeed abide by this ruling or whether residents in Bloemfontein, Thaba’Nchu and Botshabelo, amongst others, would have to brace themselves for reduced water supply.

The rating agency said liquidity pressures in Mangaung reflect a combination of weak local governance and poor effectiveness of its recovery plan.

It added that it had downgraded the long-term rating of the municipality to B3 from Ba3 with a negative outlook that it will be able to fulfil its obligations. It is stated that at the end of June 2019, the metro was owed more than R4 billion, of which 36% was owed by the business and government sector while 64% was owed by residents and other debtors.

Meanwhile, Khedama in a statement highlights that “part of the focal areas that will need the City’s immediate attention will be to review the financial recovery plan and assess the weaknesses, which have brought challenges in implementation. This will include looking at our revenue collection strategy and matters related to good governance. This is to ensure that as we go to the next assessment by Moody’s, the situation would have improved significantly”.


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