The treasurer is not happy with the manner in which the municipality projects its expenditure.
Finance minister Tito Mboweni has threatened to withhold his budget allocation to the City of Mbombela in Mpumalanga, accusing the municipality of engaging in unrealistic projections to spend money.
013NEWS this week saw the letter that deputy director-general Malijeng Ngqaleni wrote to municipal manager Wiseman Khumalo last year November.
The money that national treasury is threatening to withhold is the Equatable Share – which is money that he allocates to each and every municipality in South Africa every three months.
Treasury had given the municipality until 30 September 2020 to fix the expenditure projections but it “once more failed to rectify the situation”.
“Furthermore, the Municipal Financial Management Act your municipality’s latest Section 71 report reveals that the municipality is in breach of one or more criteria as set out in Sections 138 and 140 of the MFMA in combination or separately,” said Ngqaleni in the letter to Khumalo dated 4 November 2020.
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The municipality is accused of what is called an “unfunded budget”, which means that it submits budget projections to treasury that are either too high in expenditure or too ambitious to be realistic on the ground.
Ngqaleni said he wished to inform Khumalo in his capacity as municipal manager that treasury’s Budget Council and Budget Forum had “taken a resolution that no municipality will be allowed to adopt a budget that is not aligned to Section 18 of the municipal financial management act”.
Section 18 of this act requires that a municipality’s annual budget must be ‘funded’, which means that the projections of how the municipality plans to spend money should be realistic and not thumb-sucked.
This piece of law identifies three possible sources of funding for a municipality – first “realistically” expected revenues to be collected, then cash-backed accumulated funds from previous years’ remaining funds that were not committed for other purposes, and thirdly borrowed funds.
Ngqaleni also raised issues with how Mbombela delays paying creditors, further contravening the finance management act.
“This specifically pertains to inability to service arrear debts owed to creditors.
“This transgression further indicates that the accounting officer (Khumalo) who is responsible for the management of expenditure of the municipality is not taking reasonable steps to ensure that “all money owed by the municipality be paid within 30 days of receiving the relevant invoice or statement,” said Ngqaleni.
The EFF in Mbombela said the issue raised by treasury “is kept a secret”.
“Last year December we were supposed to sit and resolve this as the national treasury threatened to withhold our equitable share unless we go to council in December 2020 and agree on how to fix our budget,” EFF councillor Lucky Maseko said Saturday 23 January 2021.
“The council meeting didn’t sit and I am not sure if we got our equitable share from treasury in December or how the municipality executive committee chose to deal with national treasury as this is kept under wraps,” said Maseko.
Ngqaleni further tells Khumalo that the failure by the municipality to adopt a ‘funded’ budget is in breach of the financial management act and “consequently leaves national treasury with no choice but to invoke Section 216(2) of the Constitution and withhold the Equitable Share allocation” for December 2020.
“You are therefore urged to develop and implement the necessary measures that will address and remedy this situation as a matter of urgency.
“Your response to resolve these matters must include a detailed financial plan to turn this situation around together with a Council Resolution to this effect,” Ngqaleni said.
(edited by ZK)
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