Tshwane doubles loan caps for bank deals

File photo: Siphiwe Sibeko.

File photo: Siphiwe Sibeko.

Published Jun 30, 2015

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Pretoria - Short-term loan agreements by the City of Tshwane with commercial banks will be double the cap that had been agreed on for the 2015/16 financial year.

The ANC used its majority in the city council to approve short-term debt facility loan agreements, totalling R2.451 billion, with four banks.

The council also approved a long-term loan of R1.5bn from the Development Bank of South Africa to fund its 2014/15 capital programme. The tenure of the loan will be 20 years from date of disbursement.

The maximum amount approved for incurring short-term debt had been capped at R1.2bn during the 2015/16 financial year for all commercial banks, collectively.

But in terms of the new approval, agreements will be entered into with Standard Bank Ltd for a short-term loan of R500 million, Absa Bank for R851m, R800m from Nedbank, and R300m with Rand Merchant Bank.

The council authorised accounting officer, municipal manager Jason Ngobeni, to sign all the agreements for the loans.

Short-term debt facilities need to be approved by the council annually. Each debt incurred in a financial year has to be repaid in that specific financial year.

The DA’s Mare-Lise Fourie told the council that by approving double the capped amount, the city would automatically incur costs that were deemed fruitless and wasteful expenditure. This, she said, could have been avoided had better care been exercised.

Fourie proposed the report be referred back and each short-term facility reviewed and reduced to equal the capped amount.

But the ANC used its majority to shoot down the proposal.

MMC Terrence Mashego, for the ANC, did not take kindly to Fourie’s proposal and said it was an instruction. He said this was unacceptable.

“The report was presented by the mayor in terms of the legislation. You can speak to him, not issue an instruction to him,” Mashego said.

Professor Titus Khalo, also of the ANC, said the basis on which Fourie made the proposal was flawed.

DA chief whip Marietha Aucamp hit back, telling Mashego that Fourie had made a proposal and if the MMC had nothing to say, he should sit down.

Mayor Kgosientso Ramokgopa explained: “Imagine going to the bank and you are offered four times what you expected? It means the banks have confidence in your ability to pay back the money. I am baffled by the argument of… (Fourie).”

The DA’s Lex Middelberg said a point had been reached that funding the city’s budget through borrowing was no longer sustainable. The solution was to collect all outstanding debt, improve revenue collection and reduce debt impairment. A situation should be avoided where debts became so old and contaminated they had to be written off, he said.

The DA registered a dissenting vote on both matters, but they were approved by way of the ANC majority.

LOANS

Short-term

* Standard Bank: R500m

* Absa Bank: R851m

* Nedbank: R800m

* Rand Merchant Bank: R300m

Total: R2.451bn

Long-term

* Development Bank of South Africa: R1.5bn

Pretoria News

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