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“R1bn has been withdrawn from the fund by the city.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.