Sithole seeks R500 million bail-out

2011-09-07 00:00

MSUNDUZI Municipality administrator Sibusiso Sithole has asked for a cash injection of R500 million from National Treasury so that the municipality can develop a sustainable financial recovery plan beyond the period of administration.

This request was revealed during a two-day visit by treasury to the embattled municipality this week.

This is the second time the council has requested a bail-out. In August last year, the KwaZulu-Natal cabinet denied former administrator Johann Mettler any bail-out. “That would create wrong precedents,” Premier Zweli Mkhize said then.

On May 3, Sithole said National Treasury met to review the draft 2011/12 budget of the Msunduzi Municipality.

“During this meeting, attended by the administrator, provincial intervention team, and various stakeholders, Treasury suggested certain changes to improve the credibility of budgeting processes as well as the actual content of the budget,” said Sithole.

He said some suggested changes will need to be immediately implemented during the tabling of the budget adjustment in January 2012.

Sithole revealed that the administrator then formally requested Treasury’s support regarding the development of a sustainable financial recovery plan for Msunduzi, one that would endure well beyond the administration period, which was anticipated to end on June 30.

“We wanted Treasury to assist us in creating a multi-year budget reform to drive the process towards building sustainable surplus reserves for future self-financing and cash-backing of capital programmes,” said Sithole.

He said they also wanted help from Treasury in ensuring the development of strategies for revenue enhancement and the reduction of escalating municipal debt, and to assist towards the collection of government debt, which is currently sitting at more than R90 million.

“We also wanted Treasury to assist with the capacity development of Msunduzi’s finance department with particular focus on the budget office and the improvement in terms of the quality of financial information and systems.”

Sithole said the response from Treasury was affirmative, but they had to wait for a decision by the KZN cabinet about the extension of the administration for a further period and agreement about a mutual date when all parties will be available.

“We are therefore extremely delighted that at last this date has materialised. A multi-disciplinary team from Treasury visited Msunduzi to conduct an assessment about the progress that the municipality has made since it was placed under administration in March 2010.”

He said arising from this engagement, strategic challenges and priority areas for attention have been identified with a view to developing a sustainable financial recovery plan.

Once the sustainable financial recovery plan has been adopted, it will be tabled at full council for adoption and the public will also be formally briefed about this plan, Sithole said.

“To implement this plan, a key strategic priority over the next three months will be for the municipality to move with speed regarding the filling of critical positions, especially those of the municipal manager, chief financial officer and other vacant strategic positions,” he added.

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