Municipalities warned on using unbudgeted funds while owing SOEs

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Cape Town - The National Treasury has warned a number of municipalities against using unbudgeted funds to run their operations while they owe Eskom and the Water Boards millions of rand. Deputy Director-General for Intergovenmental Relations at National Treasury Malijeng Ngqaleni told the standing committee on appropriations this week they were tightening measures against municipalities who use unbudgeted funds. She said despite writing to some of these municipalities they continued to table unfunded budgets. Ngqaleni said there must be consequences for this. “What we have done is to step up efforts on enforcement. In spite of those comments that the budget is unfunded, they table it. We communicate to them that you have not tabled a funded budget. We have told them that if you do it, your own equitable share will be affected,” said Ngqaleni.

She said once municipalities table unfunded budgets they would not get further funds from the National Treasury.

The idea of municipalities tabling funded budgets was to ensure they settled their debts with Eskom and water boards.

If they refuse, this impacts on the allocations they receive.

Ngqaleni said municipalities that tabled unfunded budgets had a large debt on bulk water infrastructure.

She said municipalities must settle their current debts from their allocations then the issue of the historical debt could be looked into later.

Settling the debt “was about paying for services you are getting,” said Ngqaleni.

She said they would not allow municipalities to table unfunded budgets.

Municipalities owe Eskom more than R27 billion and the power utility resorted to cutting power to some of the councils.

Eskom has for years tried to reach an agreement with some municipalities, but they defaulted.

However, municipalities had also questioned the amounts owed to the power utility.

The state of municipalities came under scrutiny in recent times with reports from the auditor-general highlighting the rise in irregular expenditure.

In the last audit report, out of 257 municipalities only 18 got clean audits.

The government has been promising to clean up municipalities and crack down against any wrongdoing.

In Parliament last week, Auditor-General Kimi Makwetu spoke about the attack on his officials doing their work in municipalities.

National Police Commissioner Kehla Sitole was also present at the meeting.

Makwetu had been complaining about this matter for three years.

Political Bureau