No bail-out for city

2010-08-06 00:00

THERE is no bail-out on the horizon for the financially embattled Msunduzi Municipality.

So said KwaZulu-Natal Premier Dr Zweli Mkhize and Finance MEC Ina Cronjé at the legislature yesterday, where it was revealed that the municipality’s finances will barely tide them over the next three days

Cronjé said her department had not budgeted for a bail-out so “we cannot do it”.

She said they are prepared to help municipalities by enhancing their capacity until they can get back on their feet, but financial assistance is definitely out of the question.

Mkhize said a bail-out will create the wrong impression because municipalities will think that if they “cry out loudly”, something extraordinary will be done for them.

“That would create wrong precedents,” said Mkhize.

He said the municipality needs to look at improving its debt-collection policy and the provincial government will do their best to ensure that government departments pay what they owe the municipality.

Cronjé could not be drawn to comment on whether residents need to start bracing themselves for service delivery cuts in the near future owing to the municipality’s limited funds.

“We know that their cash situation is precarious … We do not intervene on the administration of municipalities and leave them to battle it out on their own. We know it’s not going to be easy, but they have begun to meet their major engagements,” said Cronjé.

Mkhize’s and Cronjé’s statements are a far cry from the sympathetic calls made by members of the legislature on Wednesday who said the only way for the municipality to get back on track is if the province gave them a much-needed cash boost.

Msunduzi administrator Johann Mettler made it very clear to parliament that the municipality will be bankrupt by the middle of its financial year, which falls in December, if they do not get financial assistance.

The Witness is in possession of the municipality’s projected cashflow for the month of August and the picture does not look good. (see insert)

According to this information, the municipality anticipates that they will receive R143 962 127,09 in cash, but are likely to spend R203 152 642,08.

This means that the likely cash deficit will be R59 190 514,99.

Major payments the municipality has to settle this month include R109 752 642,08 to Eskom on August 14, R28 million for salaries on August 24, R22 million to Umgeni Water on August 31 and R20 million to trade creditors also on August 31.

Municipal insiders who spoke to The Witness on condition of anonymity said the municipality’s loan book indicates that the municipality owes about R800 million in loans and the municipality is in turn owed a sum of roughly R625 million.

They told The Witness that they need a bail-out of between R800 million to R1 billion as this will allow them to at least settle their loans.

However, they said a bail-out will not solve all their problems.

This is because the municipality needs to bring its salary bill down and as long there are a number of people earning high salaries, the problem will not be solved and there will be increased consumer billing so that money can be brought in to cover this.

The intervention team has complained about the municipality’s high salary bill many times in executive committee meetings and have said it is costing them more than it should.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News
Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.