National Treasury takes CMLM to task
While the City has had two warnings from National Treasury with threats to withhold the municipality's budget allocation, information surrounding this dire financial situation is seemingly being kept under wraps.
National Treasury wrote two letters to the City of Mbombela Local Municipality (CMLM) last year, one in July and the second in November, warning it that if it adopted an unfunded budget, it would find itself with severe cashflow issues throughout the year, and would be unable to fulfil some of its duties to the public.
November’s letter noted that CMLM had failed to adhere to the instructions of the Treasury’s first letter, and that the municipality’s equitable share allocation (money allocated from the national government to municipalities across the country every three months) would be withheld should CMLM not take steps to rectify its financial issues.
In the letter, of which Lowvelder is in possession, it stated the municipality was in breach of one or more criteria set out in sections 138 and 140 of the MFMA Section 71 report.
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The breach pertains to the municipality’s inability to service arrear debts owed to creditors.
“This transgression further indicates that the accounting officer of the municipality, who is responsible for the management of expenditure, is not taking reasonable steps to ensure that all the money owed by the municipality is paid within 30 days of receiving the relevant invoice or statement, unless prescribed otherwise for certain categories of expenditure.”
The letter stated the municipality must ensure it adopts a funded budget and that the budget proposal over the 2020/21 medium-term revenue and expenditure framework should show a gradual improvement of cash surpluses on the operating budget for arrear payments “that the municipality failed to honour in the past”.
However, the municipal spokesperson, Joseph Ngala, said that the letters to the municipality from Treasury were “stale news”.
He said the municipality did receive the letters from Treasury and that it responded in detail on November 13.
However, when the newspaper requested the document, Ngala said, “The correspondence was between the two institutions and was duly accepted by National Treasury”.
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He said the written correspondence followed a virtual meeting held with National Treasury wherein it was resolved that the submissions made during that meeting be forwarded in writing.
The DA’s Cllr Sanley van der Merwe said she had sat in on the virtual meeting, and it had nothing to do with CMLM’s regular adoption of an unfunded budget.
She said she attended the virtual meeting as a member of the Municipal Public Accounts Committee.
“It was a meeting with National Treasury and several municipalities from the province. It was specifically about letters issued to these municipalities by Treasury for unauthorised, irregular, fruitless and wasteful expenditure. “The meeting was not related to the unfunded budget.”
“The DA has, for the last two years, highlighted this issue over and over again that the municipality is adopting unfunded budgets that are not credible and is the reason we find ourselves in this situation.
“If the municipality plans to spend more money than the municipality can generate, then of course we will find ourselves in this situation,” she said.
“Mbombela is using the pandemic as an excuse for not sharing documents, but I don’t see why they cannot share them virtually? Withholding information is serious. They are not allowing the democratic process to unfold and are not allowing us to see what is happening within the municipality.”
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