Central SA
Mangaung, only metro to adopt an unfunded budget─── LUCKY NKUYANE 14:08 Fri, 20 Dec 2019
The cash-strapped Mangaung Metro Municipality, which includes Bloemfontein in the Free State, is the only metro municipality that adopted the unfunded budget for the year 2018/19 and 2019/20.
This is according to correspondence by the national treasury department directed to the office of the premier, Sisi Ntombela. This statement came after the deputy Finance Minister, David Masondo instructed the provincial government to put the ailing metro under administration after its failure to provide service delivery to residents.
Responding to an enquiry by OFM News, the spokesperson for the department of Cooperative Governance, Zolile Lobe, confirmed that the metro, "unfortunately", is the only municipality that adopted the budget. Meanwhile, the provincial treasury spokesperson, Andrew Visagie, declined to comment on the matter.
OFM News previously reported that the Provincial and National Department of Treasury announced that it withheld equitable shares of fifteen municipalities in the province. The provincial department of treasury spokesperson, Kesalopa Gill, said this after the municipalities adopted unfunded budgets and failed to comply with directives from the department.
Gill further stated that this adoption of the unfunded budget further transgressed the provisions of the Municipal Finance Management Act (MFMA). In August the rating agency, Moody's Investors Service, downgraded municipality's long-term global scale issuer rating to B3 from Ba3, with a negative outlook, following a review initiated in May.
Moody's said the three-notch downgrade reflects the Free State municipality's weak and rapidly declining liquidity position, which recently led to a failure to service commercial bank debt on time, implying a relatively high probability of default in future.
OFM News