JSE puts big municipalities on notice

The City of Ekurhuleni and the City of Tshwane metros have not provided their annual financial statements to the JSE within the seven months required and have until month-end to do so or their debt-raising instruments could be suspended.

Government entities such as state-owned enterprises and municipalities issue bonds or debt on the JSE to raise money for large projects such as building roads and other critical infrastructure meant to improve service delivery. But failure to abide by the listing requirements could see their instruments suspended, dealing a blow to their reputation in capital markets.

The JSE said if the municipalities “still fail to submit their financial information by February 29, then their programmes and the listing of their debt securities may be suspended”.

It is not clear if the possible suspension will spook bond holders who invest in government debt and make it harder for these large municipalities to raise finance in future.

The JSE said it had made the announcement late on Thursday in the “interest of debt security holders”. These could be pension or investment funds that buy government debt.

The City of Ekurhuleni was not immediately available for comment. The EFF is in charge of the tabling of the financial reports in the coalition government with its member Nkululeko Dunga having been appointed MMC for finance.

TimesLIVE reported on Wednesday that the Ekurhuleni municipality had not tabled its 2022/23 financial statements in the municipal council by end-January as required and was in breach of the Public Finance Management Act.

The municipality blamed the auditor-general for the delay, but on Thursday the auditor-general issued a statement saying it was not to blame. The auditor-general said the audited financial statements had been returned in time, but the municipality had raised a dispute about the outcome. The dispute was subject to resolution processes and had led to the delay.

Ekurhuleni Action SA councillor Siyanda Makhubo said the delayed financials meant there is a lack of transparency about the municipality’s finances and this was concerning parties such as the JSE and those it owes money to such as Eskom, the Development Bank of SA and Rand Water. Action SA said the municipality owed creditors R4bn.

The City of Tshwane was not immediately available for comment.