Department of Water and Sanitation blames municipal debt, budget cuts for huge debt

Parliament. (Duncan Alfreds, News24, file)
Parliament. (Duncan Alfreds, News24, file)

Cape Town - A full parliamentary inquiry into the finances of the Department of Water and Sanitation has been instituted after it conceded to being billions of rand in debt.

The department presented itself before Parliament's Standing Committee on Public Accounts (Scopa) on Tuesday where its overdraft, running into billions of rand, was the centre of focus.

The committee gave attention to the irregular expenditure reported by the Auditor-General in the 2016/17 financial year and an overdraft of R2.7bn in the department's Water Trading Entity account for the same financial year.

READ: Mokonyane lambasted for 'collapsing' water dept: Scopa decries reshuffling and calls for charges

The department blamed the overdraft on the failure of municipalities to pay for services received coupled with significant budgetary cuts totalling R2.6bn in the 2016/17 financial year.

Currently, the department is owed R11bn by municipalities and water boards with the debt having risen by R1.3bn between April 1, 2017, and January 31 this year.

As a corrective step and in agreement with Treasury, the department said it decreased the overdraft to R1.9bn.

The department said the debt was "reflective of the constrained environment within which the department has found itself".

"Municipal debts are increasing at an average rate of R1bn year-on-year and with a declining fiscal allocation from the fiscus to the department. The department however is committed to eradicate the overdraft over the next financial year and similarly to increase its debt recovery methods."

The department welcomed the oversight of Scopa saying it would "continue to support any effort that seeks to assist in co-ordinating the responsible management of financial obligations by debtors of the department, mainly municipalities, and those of the department".

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