The National Treasury’s Malijeng Ngqaleni issued a stern warning to the Department of Cooperative Government (Cogta) and Kopanong that it will not be an accomplice to the Municipality’s delinquent act. This was after Cogta wrote to Treasury, seeking guidance on how to resolve the financial issues at the municipality following the Free State High Court's order to attach the municipality's bank account for failing to pay over third-party contributions worth R26 million since 2012.

The Provincial Treasury and Cogta wanted to release millions of rands into the Xhariep District Municipality to pay salaries and services but the move has been shot down by Treasury because it’s deemed to be illegal.

Treasury has also reaffirmed its position on the bail-out of municipalities, not only in the Free State but across the country.

Ngqaleni adds that “there seems to be a misguided narrative of a financial bailout to municipalities, and this is prevalent in municipalities in the Free State province and the provincial departments. If the Provincial Department of Cogta and Free State Treasury allows such discussions, then an expectation is created at municipalities that their plea for financial bailout/assistance will receive a favourable outcome". She says this observation emanated from a similar request that was previously submitted to the National Treasury in a letter dated 5 September 2011.  

"The feedback provided by National Treasury clearly stated no bailout to municipalities, under no circumstances. This principle is key in the promotion of accountability and prudent financial management by all government departments, municipalities, and their entities,” she further adds.

The municipality and Cogta have been encouraged to reach out to the pension fund and discuss the payment arrangement.

"It is advisable for Kopanong Municipality to reach out to the Municipal Workers Pension Fund with the aim of entering into a payment arrangement that is not onerous to the finances of the municipality.

This can be done through an application for the Court to grant a relief on its Court judgment to allow negotiations with the complainant. If need be, a mediation process can be established to bring both parties to the negotiation table," she alludes.

Ngqaleni further explains that this will bring much-needed financial relief to municipalities given, the growing government debt in Free State municipalities.

Ngqaleni recommends the Provincial Department of Treasury must encourage Cogta to surrender the savings into the Provincial Revenue Fund, thereafter, it must be allocated to the departments to pay for municipal services, especially Property Rates. 

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