Business Insider SA 24 June 2020

Finance minister Tito Mboweni on Wednesday delivered a supplementary national budget that, he said in the written version of his speech, “saves lives, protects livelihoods and actively builds a bridge to a prosperous future”.

It also channels a lot of extra money to South Africa’s nearly universally dysfunctional municipalities.

Extra money put towards health in the rejigging of the books will amount to R21.544 billion, the accompanying budget review document showed.

Money categorised as “support to municipalities”, meanwhile, totals R20.034 billion, or just about 93% of the health allocation.

R11 billion of that is effectively new money, while R9 billion will be directed to the coronavirus response through the reallocation of conditional grants to municipalities.

Mboweni did not speak to the money allocated for municipal support in his speech, saying only that “municipalities will adjust their budgets to take into account the sharp decline in revenue as a result of the pandemic”.

According to the budget review, major changes in allocations include to the municipal infrastructure grant, to provide water to households, and money to sanitise public transport where municipalities are not already receiving a public transport grant.

“Municipalities are responsible for implementing many aspects of the Covid-19 response,” the document says. “These include providing improved access to water and sanitation in informal settlements and rural areas, providing temporary shelter for homeless people, and sanitising public transport facilities.”

Municipalities will receive money both for additional water and sanitation rollout and to provide free basic services to 1.4 million more people.

Much of the money involved has been allocated to poorer municipalities, according to the budget review.

But there are still many uncertainties in forecasting municipal finances, according to the budget review, such as how long massive decreases in the payment of rates and taxes will last.

“The extent to which municipal bills are paid in the months ahead will depend on the duration of restrictions on economic activity, the pace of recovery and the application of revenue collection measures,” the budget review says. Many local governments were already in financial distress.”

The state of municipal financial control and reporting is dire – and getting worse.

Just before Mboweni delivered his speech, Parliament heard that just or 8% of SA’s 257 municipalities received clean audits for the 2018/2019 financial year.

During the course of the year R12 billion in unauthorised expenditure was recorded, with R2 billion marked as lost to fruitless and wasteful expenditure.

“We urge communities to hold councils accountable for the spending of Covid-19 funds,” Mboweni said in the written version of his speech. “National Treasury will also monitor the spending through monthly and quarterly reports.”

Municipalities will be required to ring-fence and classify their Covid-19 expenditure correctly, the budget review says.

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