The trouble-ridden Mangaung Metro faces the drastic action of having its December equitable share allocation withheld, owing to the authorities’ chronic inability to improve its financial state.
The DA in Mangaung has confirmed that the National Treasury has issued a formal notice under section 216(2) of the Constitution, citing the persistent inability of authorities to improve the municipality’s financial state and non-compliance with legislation.
“The metro’s December equitable share allocation may be withheld due to severe and persistent breaches of the Municipal Finance Management Act (MFMA). This is one of the most serious financial enforcement measures available to the Treasury. This signals that the Mangaung Metro is on the brink of fiscal failure and service delivery collapse,” said Tjaart van der Walt, DA councillor.
“In terms of MFMA section 52 (d), mayor Gregory Nthatisi must report to the council on the implementation of the budget and the financial state of the municipality. Despite the gravity of this threat, the mayor has failed to table the Treasury letter and its implications before the council.
“Furthermore, the MFMA requires the accounting officer to report ‘any impending financial problems’ to the mayor, and the council must be allowed to consider the city’s response as required for the constitutional process.
“Diesel shortages and non-payment to contractors have already led to failure in basic service delivery in the city during November. The Municipal Public Accounts Committee (MPAC) − the key oversight body mandated to deal with unauthorised, irregular, fruitless, and wasteful expenditure (UIFW) − is itself dysfunctional. The MPAC has not followed its approved work plan.
“In a last-ditch attempt to address the Treasury and DA letters, on 18 November a last-minute MPAC meeting was held without prior access to the documentation, contrary to the standing rules. A day later, more than R7 million in UIFW expenditure was presented with the same procedural defects.
“This breakdown undermines lawful oversight at a time when Mangaung needs it most.
“The Treasury requires Mangaung to show a 75% reduction in its UIFW balances, implement consequence management, and demonstrate tangible action. The metro is nowhere near compliance,” said Van der Walt.
Due to these financial problems, rating agency Moody’s has downgraded the Mangaung Municipality’s long-term global scale issuer rating to junk status in 2020.
