SA municipalities in R64,4-billion debt and collapsing PAUL BERKOWITZ writes in Daily Maverick:
'There is no way to break it to them gently where the state of our municipal budgets are concerned. The time for a no-holds-barred overhaul is right now. Are you listening, Mr President – it is time for tough love'. by Paul Berkowitz. The treasury released its latest quarterly report on municipal finance for January to March 2011 (which is the third quarter of the 2010/11 financial year). It was released two weeks late, at 18:20 on Friday. We were only able to crunch the numbers early this week. In short, municipalities are in a mess. There is no way of glossing over or finessing this fact. The latest municipal financial data are out and the picture is even worse than we feared. Total debt grew from R62.3 billion to R64.4 billion by end-Q3. Only R514 million, or 0.8% of total debt, was written off as bad debt during this period. The metros (original six) are responsible for R35.9 billion of this debt, or about 56% of the total. The secondary cities (including Mangaung and Buffalo City) are responsible for another R12.3 billion, or 19% of the total. Johannesburg’s debt is R11.4bn or 18% of total debt. After a few quarters where the debt situation showed tentative signs of improving, it is starting to look worse again. The overall age of the debt is increasing: in Q1 2010/11 about 73% of all debt was older than 90 days. This increased to 75% of all debt by Q2 and has now risen to 78% of all debt. Total debt under 30 days old has fallen from 18% to 15%.
Operating budget revenue collection is fairly good, but spending is not as good. Operating expenses are fairly predictable (salaries, bulk water and electricity, provision for bad debt) so this underspending on the operating side is a concern. more: