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The Democratic Alliance (DA) has voted against Ngwathe Local Municipality’s draft budget for the new financial year starting 01 July 2024, during a "special urgent" meeting in Parys. Despite the DA's objections, the R1 billion budget was approved in less than an hour.
We consider this yet another example of continued poor financial management in a municipality that has been sliding into an ever-worsening financial crisis over the past decade.
The approved budget projects operating expenditures at R1.098 billion but expects operating revenues of only R1.044 billion. This leaves an enormous operating deficit of R54 million, in clear breach of budget legislation. We have regularly warned against such unfunded budgets.
Deficit budgeting creates operating cash shortfalls, which lead to late payments to creditors and hamper spending on preventive maintenance, repairs, and asset replacement or enhancement.
A major problem is that Ngwathe now collects only 30-40% of its billed invoices, whereas in many DA-controlled municipalities, the collection rate is 90-95%. Yet there seems to be no clear and credible plan to fix this unsustainable shortfall.
Over several recent years, DA councillors have repeatedly asked for a two-pronged Recovery Plan. One avenue is to make its unused assets—farmland, certain rental properties, holiday resorts, and commercial buildings—work harder. Another is to stop water and power theft and collect arrears accounts with vigour. It must also reduce frivolous or wasteful expenses without lowering the quality of its services.
Despite apparent support, ANC leadership has not yet implemented an effective plan. Until then, the unfunded budgets will continue to arise, year after year.
Ngwathe needs a detailed recovery plan, and it must be implemented as soon as possible.
Issued by Carina Serfontein - DA Councillor Ngwathe Local Municipality
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