The National Treasury’s local government revenue and expenditure report was released over the weekend: Some municipalities would have hoped Saturday was an ideal time to bury bad news, but you can’t really hide a debt mountain when it’s this big.
The data presented in this report covers the third quarter of the municipal financial year ending on 31 March 2019. It allows both provincial and national government to exercise oversight over municipalities, and identify any possible issues in implementing municipal budgets and conditional grants.
Areas with the worst debt record in South Africa
In a document which is littered with financial jargon, there is a very clear and plain explanation of who owes the largest chunk of debt. The National Treasury were able to identify municipalities in the following three provinces as the worst offenders:
- Free State has the highest number of outstanding creditors, still owing 89.4% of money received.
- Mpumalanga is in second, whittling its backlog down to 82%
- North West reluctantly takes the bronze, owing 81.1% of its outstanding creditors.
Spending, debt and investments
Municipalities haven’t been shy to spend in the most recent quarter. In fact, their total amounts are worth more than R6 billion from last year. Out of 209 municipalities surveyed, there are a whopping 2 709 “investments”.
“The closing balance for ‘investments’ made by municipalities equates to R41.9 billion – The term covers bank deposits of R33.9 billion, guaranteed endowment policies (sinking funds) of R4.4 billion, negotiable certificates of deposits at banks of R2.2 billion and listed corporate bonds of R1.4 billion.”
How much money do municipalities owe in South Africa?
However, more than half of these municipalities – 118, to be precise – report that they have no outstanding loans. But not everyone has been behaving well: The report states that R50.6 billion is owed by municipalities at the end of March 2019 – which is actually R300 million less than the previous quarter. It’s a small victory, hey?
All debt totalled up by the National Treasury is defined as “monies that haven’t been repaid to outstanding creditors within 90 days of the agreed deadline”. The figures would be even higher if a more short-term view was implemented, but the government have exercised a touch of leniency with this publication.