Metro can’t afford loan
THIS metro cannot afford the proposed loan (“Metro wants R750m loan for infrastructure”, October 23), irrespective of who leads the city for, among others, the following reasons:
ý The liquidity ratio for July last year to June this year quarter four was 0.57.
This is regarded as bad by National Treasury (source municipalmoney.gov.za);
ý Ratepayers will have to service this loan;
ý The government will be collecting less this financial year, so will NMBM (refer the budget speech); ý High unemployment in this city; ý Political leadership in the city lacks the financial background to appreciate the current poor state of finances (refer to David Maynier’s comments with regard to government debt and the cost of servicing debt – let the DA consult its shadow finance minister);
ý Poor service delivery does not promote confidence that monies spent will result in better service delivery.
Politicians who support incurring of debt must know that they will be held accountable should it not deliver the desired results. For those with reasonably good memories, this metro not so long ago could not pay suppliers promptly due to liquidity challenges.
It appears the EFF in principle supports the loan. Will the poor really benefit?
A loan will not reduce water losses or electricity wastage, proper political leadership/management and sound financial management will.
The alternative is to start with a very small loan which targets selected areas. Show clearly how the loan will benefit the poor, and monitor and report how the loan pays for “itself” monthly – money in the bank.