Finance and Economic Opportunities

Question by: 
Hon Nobulumko Nkondlo
Answered by: 
Hon David Maynier
Question Number: 
9
Question Body: 

With regard to the COVID-19 pandemic and the national lockdown that has slowed down government services and programmes:

  1. What is the projected aggregate spend by municipalities for this quarter of the financial year versus their budgets?
  2. Whether there is any variances and whether this points to the possible under-spending of most municipal budgets; if not, why not; if so, what are the relevant details and breakdown ?
  3. What measures have been put in place by his Department for municipalities to mitigate the budget risks for municipal finances and spending associated with the lockdown and COVID-19?
  4. Whether there are any municipalities that have exercised the Regulation No 429 by the National Treasury on the Local Government: Municipal Finance Management Act, 2003 – Exemption from Act and Regulations – under one or both conditions stipulated in section 3(1)(2); if not, why not; if so, what are the relevant details?
  5. Whether there are any municipalities that have passed special adjustment budgets given that there are only two months before the municipal financial year-end; if not, why not; if so, what are relevant details, including details of major shifts, adjustments and revised or new areas of spending related and/or not related to COVID-19 emergencies?
  6. (a)(i) Which conditional grants have been affected by COVID-19 and the lockdown? and (ii) What are the details per municipality, (b)(i) What major revenue streams have been affected by COVID-19 and the lockdown per municipality and (ii) How has this exposure been managed by each municipality?
Answer Body: 

The consolidated statement reflecting the financial performance of municipalities as at the end of the third quarter (ending 31 March 2020) of the 2019/20 municipal financial year. This consolidated statement was published in Provincial Gazette Extraordinary Nr. 8234 dated 30 April 2020 as prescribed by Section 71(7) of the MFMA. 

A copy of the Provincial Gazette is included for ease of reference.

Question 2

It is challenging to conclude on whether any of the municipalities would underspend. However, the non-submission of critical financial and non-financial information would have supported such a conclusion. Limitations due to the national lockdown include:

  • Beaufort West municipality, which did not submit financial data strings. The budget outcomes for them are only up to the period, ending 29 February 2020; and
  • Overstrand, George, Central Karoo District and Beaufort West Municipalities that did not submit non-financial data strings in respect of Debtors and Creditors age analysis. No information is therefor included in the publication.

The slow pace of spending at 17.2 per cent against the capital budget remains a challenge, with reporting errors, which impact on the credibility of the numbers reported to-date.  Further delays are expected due to the nationwide lockdown.

Question 3

Provincial Treasury continues to invest in resources and efforts to assist municipalities to address improved budget implementation processes and ensure credible budgeting. Support includes: on-site support with budget verifications; the Back to Basics programme; Annual Budget and In-Year Monitoring training; Revenue Management Master Class and Revenue improvement initiatives; and support to develop long term financial plans.

A provincial circular was also issued to provide guidance and clarity to Accounting Officers of municipalities and municipal entities in respect of:

  • Managing their procurement requirements in response to the Coronavirus (COVID-19) pandemic and the subsequent business continuity during the lockdown period and thereafter; and
  • The impact of National Treasury MFMA Circular 101 relating to COVID 19 - Bulk Central Procurement Strategy for Government Institutions.

The Provincial Treasury will further aid with predicative analysis on the economy and financial management forecasting capability that would assist in ensuring sustainable municipal budgets and provide an economic response to local economies.

Question 4

In terms of the submission of in-year monitoring reports, Overstrand, George, Central Karoo District and Beaufort West Municipalities utilised the exemption notice, whilst George and Laingsburg Municipalities utilised the notice with regards to the tabling of the 2020/21 MTREF budget in compliance with Section 16(2) of the MFMA.

Question 5

To date (5 May 2020), no municipality has tabled or adopted a special adjustment budget in respect of COVID-19. The National Lockdown which was partially lifted with effect from 1 May, prohibited council meetings from taking place.

The latest date to table a special adjustment budget is 15 June 2020. National Treasury has advised municipalities to carefully consider the timing of tabling a special adjustment budget as only one such special adjustment budget will be allowed up to 15 June 2020.

Question 6

National Treasury approved that the City of Cape Town, re-allocate uncommitted conditional grants amounting to R163.1 million against the Urban Settlements Development Grant (USDG) funds allocated in 2019/20 financial year. These funds will be used to support Covid-19 pandemic relief efforts.

The Department of Local Government allocated R16.2 million to non-metro municipalities through the Local Government Support Grant:

To provide financial assistance to district municipalities to perform the administrative and monitoring role, including data management relating to humanitarian relief; and provide financial assistance to local municipalities to augment and support current humanitarian relief initiatives.

A copy of the Provincial Gazette Extraordinary 8232 dated 24 April 2020 which provides a breakdown per non-metro municipality is included for ease of reference

Date: 
Thursday, April 30, 2020
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