Municipal consumer debt at R128.3bn

Tuesday, June 6, 2017

Pretoria – The aggregate municipal consumer debt amounted to R128.3 billion in the third quarter of the 2016/17 financial year, compared to R117.7 billion which was reported in the second quarter, says National Treasury.

“It needs to be acknowledged that not all the outstanding debt of R128.2 billion is realistically collectable, as these amounts are inclusive of debt older than 90 days (historic debt that has accumulated over an extended period), interest on arrears and other recoveries.

“If consumer debt is limited to below 90 days, then the actual realistically collectable amount is estimated at R24.1 billion,” National Treasury said.

The largest component of the debt related to households, which accounted for R86 billion.

On Monday, National Treasury released local government’s revenue and expenditure for the third quarter of the 2016/17 financial year.

The third quarter publication covers financial and conditional grant information from 257 municipalities.

“A total amount of R1.6 billion has been written off as bad debt. Government accounted for 5.1% or R6.6 billion (R6.3 billion reported in the second quarter),” National Treasury said.

According to the Third Quarter Local Government Section 71 Report, metropolitan municipalities are owed R65.7 billion (R57 billion reported in the second quarter) in outstanding debt as at 31 March 2017.

This represents an increase of R11.3 billion, compared to the third quarter of the 2015/16 financial year.

“The City of Johannesburg was still owed the largest amount at R18.5 billion (R17.7 billion in the second quarter). This was followed by Ekurhuleni Metro at R13 billion (R12.7 billion in the second quarter), City of Tshwane at R8.6 billion (R8.4 billion in the second quarter) and Cape Town at R8.1 billion (R7.6 billion in the second quarter),” National Treasury said.

Households in metropolitan areas were reported to account for R43.4 billion of outstanding debt to metros, followed by businesses, which accounted for R18.8 billion of the outstanding debt.

Debt owed by government agencies was approximately R1.9 billion of the total outstanding debt owed to metros.

Secondary cities were owed R26.4 billion (R25.9 billion reported in the second quarter of 2016/17) in outstanding consumer debt.

“The majority of debt was owed by households, which amount to R20.1 billion of the total outstanding debt. Out of the total debt of R26.4 billion, R22.2 billion or 84.1% has been outstanding for more than 90 days.

“Municipalities owed their creditors R34 billion as at 31 March 2017, a decrease of R292 million from the second quarter of 2015/16,” National Treasury said.

Free State has the highest percentage of outstanding creditors greater than 90 days at 85.9%, followed by North West at 77.4% and Limpopo at 74%.

National Treasury said the year-on-year increase in outstanding creditors could be an indication that municipalities are experiencing liquidity and cash challenges and consequently are delaying the settlement of outstanding debt owed.

Disputes also have an effect on the increasing creditors.

“On aggregate, municipalities spent R245.1 billion, of the total adjusted expenditure budget of R400.2 billion (adopted budget of R394.5 billion) as at 31 March 2017 (third quarter results for the 2016/17 financial year).

“In respect of revenue, aggregate billing and other revenue amounted to 70% or R276.1 billion of the total adjusted revenue budget of R394.4 billion (adopted budget of R393 billion),” National Treasury said. – SAnews.gov.za

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