Ratings Afrika off target
The City of Johannesburg notes media coverage emanating from a report apparently published by Ratings Afrika, stating that Johannesburg’s liquidity position has deteriorated. This is not the first time this organisation has issued such statements. In the past the city has attempted to understand its scoring model and how scores are standardised to address the fundamentals and different make-up of municipalities. To date, Ratings Afrika has refused to enter into such a discussion.
The city is in constant contact with the Treasury, ratings agencies and the auditor-general, which continuously assess its financial position. After maintaining our credit rating at investment grade with a stable outlook, Moody’s noted as recently as March that the following were key strengths of our administration: strong revenue growth supported by a broad tax base, sophisticated financial management and a large and diversified economic base.
During our adjustment budget we acted to secure the short- to medium-term financial sustainability of the city by adjusting our expenditure in line with our performance in revenue, while ensuring that we spend our limited budget corruption-free and get value for every rand invested. By the third quarter of this year the city’s cash investments totalled R8.3bn. The cash coverage ratio is set at 45 days, exceeding the Treasury’s stipulated 30 days.
As matters stand the city’s current ratio stands at 1:1, indicating that it has sufficient current assets and cash to cover current liabilities, in line with industry norms. Our debt-to-revenue ratio remains in line with the Treasury’s norm of 45%.
The above are all indications that the city is in a financially sustainable position, contrary to the claims made by Ratings Afrika, and we remain committed to improving our capacity to deliver services to residents.
Should Ratings Afrika or any other organisation be truly interested in determining the true financial status of Johannesburg, they are invited to visit our offices at any time.
Stanley Maphologela Communications director, Johannesburg group finance.