Question NW2937 to the Minister of Finance
04 October 2023 - NW2937
Alexander, Ms W to ask the Minister of Finance
Whether, in light of financial losses incurred by municipalities as a result of lower electricity sales due to the rolling blackouts, the National Treasury has taken any steps to assist struggling municipalities to adapt and recalibrate their budgets; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
The Municipal Finance Management Act, 2003 (Act No 56 of 2003) and through various sections of the Act, provide guidelines to municipalities on how to treat impending revenue shortfalls. In addition, the National Treasury also provides regular Budget Circulars to guide municipalities to prepare annual budgets and address situations like loadshedding.
Section 70 of the MFMA, subsection 1. “the accounting officer of a municipality must report in writing to the municipal council – (a) any impending (i) shortfalls in budgeted revenue, and (ii) overspending of the municipality’s budget, and (b) any steps taken to prevent or rectify such shortfalls or overspending.
Section 28 of the same Act provides guidance on Municipal Adjustments Budgets – (1)(a) that “a municipality may revise an approved budget through an Adjustments Budget and (2)(a) must adjust the revenue and expenditure estimates downwards if there is a material under collection of revenue during the current year.
Given the fiscal constrained environment within which the National Fiscus operates, the National Treasury was not in a position during the preparation of the 2022 MTEF, to make any additional funding available to municipalities for this purpose. As a result, they were advised to reprioritize their tabled 2023 MTREF Budgets to absorb the cost associated with loadshedding within baselines.