City of Joburg is in dire fi­nan­cial trou­ble, claims ANC

The Star Early Edition - - POLITICS - NONI MOKATI

THE ANC in Greater Jo­han­nes­burg has called for ur­gent in­ter­ven­tion in re­solv­ing the fi­nan­cial cri­sis it says is cur­rently faced by the City of Joburg mu­nic­i­pal­ity.

“The fi­nan­cial sit­u­a­tion in the City of Jo­han­nes­burg re­quires ur­gent at­ten­tion if the met­ro­pol­i­tan mu­nic­i­pal­ity is to sur­vive over the next few months,” the re­gion said yes­ter­day, ad­dress­ing the me­dia.

In a state­ment, for­mer mayor and ANC Joburg re­gional chair­man Parks Tau said there was a clear in­di­ca­tion that his suc­ces­sor DA mayor Her­man Mashaba and his team were in­ex­pe­ri­enced and in­ca­pable of run­ning the mu­nic­i­pal­ity, adding that one year on, the op­po­si­tion party-led-coali­tion is al­ready over­whelmed by the task of lead­ing the city.

Con­cerns raised by the rul­ing party in­clude what Tau termed as rev­enue un­der­per­for­mance, an in­flated bud­get, ex­pen­di­ture de­cline and a pre­car­i­ous liq­uid­ity po­si­tion.

On rev­enue, Tau said the city has ex­pe­ri­enced a rev­enue un­der-billing of R2.4 bil­lion, with an un­der-col­lec­tion of over R3bn by the end of June.

“This means the city is now only able to de­liver ser­vices in the short-term, us­ing bor­rowed funds. This po­si­tion is not sus­tain­able and it will show in a few months’ time when a drop in ser­vice de­liv­ery lev­els be­comes vis­i­ble,” he said.

Delv­ing into the bud­get, he sug­gested that the DA’s de­ci­sion to draw up a R1bn bud­get with no in­di­ca­tion of where the money would come from was trou­bling.

He said the bloated fig­ures would ul­ti­mately place the en­tire bud­get at risk, es­pe­cially the Cap­i­tal Ex­pen­di­ture (Capex) bud­get, which, in part, is funded from sur­pluses.

Tau fur­ther high­lighted that the redemp­tion of the R2.7bn bond and bank loans was also com­pro­mised by the cur­rent ad­min­is­tra­tion raid­ing the mu­nic­i­pal­ity’s Debt Redemp­tion Fund which he said had been set aside to pay its loans.

“R1bn has been with­drawn from the fund by the city. The with­drawal from the Debt Redemp­tion Fund is a breach of prom­ise made to in­vestors and rat­ing agen­cies, and it is against the ob­jec­tive for which the fund was es­tab­lished.”

He ex­plained that due to a cross-de­fault clause in some of the city’s debt agree­ments, a de­fault in re­pay­ing the debt when it falls due would re­sult in in­vestors call­ing for the city to im­me­di­ately set­tle all out­stand­ing debt amount­ing to more than R19bn.

“The city will not be in a po­si­tion to hon­our the set­tle­ment. There­fore it can­not af­ford a sin­gle de­fault,” Tau said.

Mashaba pointed out that the DA had in­her­ited cur­rent chal­lenges, par­tic­u­larly the billing cri­sis, from the ANC un­der Tau’s lead­er­ship.

Tau said the party would ask Trea­sury to con­duct an anal­y­sis of the City of Joburg’s 2017/18 bud­get.

He said it would also re­quest the pro­vin­cial gov­ern­ment, through MEC for Hu­man Set­tle­ments and Co-op­er­a­tive Gov­er­nance Paul Mashatile, to keep an eye on the fi­nan­cial po­si­tion of the city over the next few months.

Mashaba said the DA had in­her­ited the billing cri­sis from the ANC

CRI­SIS TIME: Parks Tau

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