City faces imminent bankruptcy, says DAComment on this story
Pretoria - The DA has called on Gauteng Local Government MEC Ntombi Mekgwe to intervene in the financial affairs of the Tshwane municipality as it is “facing imminent bankruptcy”.
This comes after the municipality’s salary payments to staff were apparently delayed because “it had used its long-term debt account to pay salaries”, the party said.
The municipality was due to release a response to the DA’s allegations on Tuesday afternoon, but later said a comprehensive response would be issued on Wednesday.
DA Gauteng local government spokesman Fred Nel claimed the municipality’s inability to pay the salaries was a major red flag. It “indicates serious financial constraints within the municipality”.
The delay in the payment of salaries was because the municipality had used its long-term loan account for the payment as it did not have money for its operational expenses, Nel said.
“It is not the first time in the past year that Tshwane has experienced problems paying creditors. Its creditor account at the end of its financial year in June last year stood at R2.3 billion, with the auditor-general remarking that the municipality is ‘technically bankrupt’,” he said.
“These indicators are damning and serve as a clear warning that the Tshwane municipality is facing imminent bankruptcy.”
The alleged move was illegal as long-term debt could be used only for capital expenses and not for operational expenses such as salaries, Nel said.
He called on the MEC to place the municipality under administration to “prevent this financial disaster from worsening”.
“It is clear that the Tshwane municipality can no longer meet its obligations.
“This could seriously compromise the municipality’s ability to render services in terms of its constitutional mandate.
“The MEC can no longer turn a blind eye to a municipality that is in crisis.
“She has no choice but to intervene sooner rather than later.”
The DA allegations follow a bitter feud between the party and Tshwane mayor Kgosientso Ramokgopa in the council last year.
The mayor claimed at the time that four DA councillors could not be trusted after they had submitted a report to National Treasury sounding an alarm over the municipality’s plans to obtain a R1.5 billion bond.
The councillors had approached Standard Bank with the same report.
The move raised Ramokgopa’s ire and resulted in a bitter public confrontation in the council.
Ramokgopa claimed at the time that the four councillors were intent on thwarting the municipality’s efforts to obtain a clean audit.
This claim was dismissed by the DA, which said its main objective had been to prevent a “black hole of debt” from consuming all the city’s assets in years to come.
Mekgwe’s spokesman, Motsamai Motlhaolwa, said the call by the DA for the MEC to intervene had not been made directly to her office.
He was not aware of it until contacted for comment.
He said the department was always in touch with municipalities.
“We are confident that the municipality, as a full sphere of government, is well equipped to handle all matters relating to the provision of services to the residents of the City of Tshwane,” said Motlhaolwa.
“The City of Tshwane will issue a statement tomorrowon how it is going to deal with this issue and all other issues that relate to service delivery.”