Question NW2677 to the Minister of Finance
04 October 2023 - NW2677
Kruger, Mr HC to ask the Minister of Finance
(1)Given the Auditor-General’s findings of 2020/2021 that 84% of municipalities consistently fall short of the statutory 30-day payment term which imposes a significant financial strain on small companies, sole proprietors and cooperatives, what (a) proactive measures are being developed by the National Treasury to ensure that municipalities honour their financial commitments to these entities within the required time frame and (b) considerations, frameworks and/or potential regulatory interventions are currently being contemplated; (2) what (a) are the details of the account of the fiscal liabilities and (b) proposed financial regulations and/or interventions are intended to enforce adherence to the payment time frame?
Reply:
(1)(a) Creditors with outstanding invoices have been encouraged to escalate matters to the National Treasury through the helpdesk facilities, [email protected], and [email protected], respectively. These are followed up with the respective Municipal Manager and Chief Financial Officer. Copies are also forwarded to the relevant provincial treasuries for their additional oversight, monitoring and facilitation of engagements with the relevant municipality, where required.
(1) (b) Section 65(2)(e) of the Local Government: Municipal Finance Management Act, 2003 (MFMA), requires the Accounting Officer to take all reasonable steps to ensure that all money owing by the municipality be paid within 30 days of receiving the relevant invoice or statement. The National Treasury has issued MFMA Circular 49 which includes a step-by-step approach to be adopted by municipalities to ensure that they consistently fulfil their financial obligations. Additionally, National Treasury has issued standard operating procedures for municipalities in relation to expenditure and liabilities management. These matters are also addressed when requested to develop Financial Recovery Plans.
(2) (a) The National Treasury publishes regular reports as required by section 71 of the MFMA. The latest publication of the Local Government Revenue and Expenditure: Fourth Quarter Local Government Section 71 Report, for the period 1 July 2022 to 30 June 2023, reflects amounts owed by municipalities to creditors for more than 30 days of R75,9 billion for the 4th Quarter of the financial year. The details of which, are available on the National Treasury website.
(2)(b) Accountability arrangements in the MFMA requires the Municipal Council and the Municipal Manager to take disciplinary action against officials responsible for non-compliance with internal control measures.