Question NW16 to the Minister of Finance
06 March 2024 - NW16
Buthelezi, Ms SA to ask the Minister of Finance
Considering that the debt owed to municipalities by government departments is at the core of the financial challenges faced by municipalities, what are the full, relevant details of (a) an overview of the municipal debt of each government department and (b) how the National Treasury intends to address the debt issue?
Reply:
a) The high-level analysis of municipal debt for each government department as per MFMA S71 report for the financial period ending 31 December 2023 shows a total outstanding debt of R22 065 billion.
b) An additional breakdown of the total outstanding debt can be summarised as follows:
Total National Departments R8 015 billion
Total Provincial Departments R9 756 billion
Other entities and institutions R4 294 billion
Further details of the actual outstanding debt per department, entity or institution are depicted in Table 1 which is attached (Debtors Age Analysis for Organs of State).
c) National Treasury (NT) has encouraged municipalities to enforce its credit control and debt management policies and bylaws. This implies that if any organ of state neglects to honour their payment arrangement for services rendered by municipalities within the legislative timeframe of 30 days as per the PFMA and MFMA, the municipal, by law, must proceed to terminate or restrict the services to those customers (including government departments and businesses) with immediate effect.
Even if the customer questions the accuracy of the bill issued by municipalities, which may be a valid concern, it is not acceptable not to honour the payment for services that were consumed. In some cases, dependent on the specific credit control and debt management policy, the customer may have to pay first before any dispute is resolved.
In addition, the National Treasury have implemented various legislative mechanisms which are complemented by specific MFMA circulars, particularly those related to budgeting and debt, to guide municipalities towards financial stability and efficiency and applying debtors’ management and collection to all the customers including organ of state debt correctly.
Currently the National Treasury initiatives include smart solutions to enhance consumption accuracy by enabling precise tracking and billing; optimizing revenue collection; and ensuring fair charges for actual usage.
Annexure A
(Table 1: Debtors Age Analysis for Organs of State)
