Msunduzi still solvent — Haswell

2009-09-04 00:00

ALTHOUGH the Msunduzi Municipality remains solvent, strict credit control measures will have to be taken to ensure that financial resources are not eroded.

Municipal manager Rob Haswell said this in response to a report written by then-acting municipal manager Phil Mashoko which stated that “the cash-flow position of this municipality is not as healthy as it should be.”

The report, which was tabled at a full council meeting and then suddenly withdrawn, said the municipality was on the verge of plunging “into a liquidity crunch if a long-term loan to fund the capital projects is not raised”.

Haswell said Mashoko’s report was a cursory comparison of the municipality’s June 30, 2008 reserves with those of June 30 this year.

“Yes our reserves were depleted from R263 million to R113 million, but that was due to the fact that we achieved record levels of capital expenditure during that 12-month period, and utilised R146 million from reserves for that purpose,” said Haswell.

He said a R150 million loan granted by the Development Bank of South Africa on August 20 not only enabled the municipality to pay off all creditors, but also significantly replenished the reserves.

“If, however, as the acting municipal manager pointed out, we do not increase our collection levels [which are currently 75% over a monthly period], we will steadily erode our resources,” said Haswell.

He said the municipality was owed a total of R86, 7 million by various government departments and the situation was unacceptable and a recommendation for the assistance of the finance MEC will be made.

“Another large debt is the R95 million in rates that [are overdue by] 120 days. Clearly, we can no longer carry this, and must apply strict credit control, including repossession, if necessary,” said Haswell.

Haswell recommended that the raising of a R200 million loan to fund a portion of council’s 2009/10 capital budget be conducted speedily.

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