Metro approves loan without funding plan

The metro’s financial troubles deepened on 28 August, when the council approved an increase of its overdraft facility to R800 million for the 2025/26 financial year.

The approval came despite the absence of a funded budget or a credible plan to address the growing deficit, sparking sharp criticism from opposition parties.

The DA and FF Plus opposed the decision, warning that the metro was piling unsustainable debt onto already overburdened residents.

Cilliers Brink, DA caucus leader in Tshwane, was firm in his rejection.

“The council has approved a R800-million overdraft facility despite the metro not having a funded budget or a credible funding plan. Without a council-approved plan to address the deficit, the DA cannot help the metro to incur more debt,” Brink said.

This decision follows a series of financial setbacks that have worsened the metro’s fiscal outlook.

Last month, the Gauteng High Court struck down the metro’s so-called City Cleansing Levy, introduced earlier this year by the ANC-led coalition.

The metro’s application for leave to appeal was denied, leaving the metro with an operating deficit of at least R500 million.

Brink reminded councillors that the DA had opposed the levy from the start.

“Aside from Tshwane residents already being overburdened, it was never clear if the tariff was structured to fund city cleansing. The DA’s suspicion, which has since been confirmed, is that the levy was an attempted quick fix to plug the budget deficit,” he said.

The DA also highlighted the metro’s underperformance in nine of the twelve months of the 2024/25 financial year, during which the ANC coalition was in charge.

By June, the metro had closed the financial year with a deficit of R857 million.

Brink stressed that municipal law requires a funding plan whenever a budget runs into deficit.

“If a municipality’s budget has a deficit, the council must adopt a funding plan, a set of measures to achieve a funded budget within a specified period.

“It was in terms of a funding plan in the past two financial years that the council made difficult decisions aimed at improving the metro’s financial position,” he explained.

One of those difficult measures was to freeze councillor and staff salary increases in 2023/24, saving R600-million, and enabling a favourable payment arrangement with Eskom.

Brink argued that this kind of financial discipline is missing in the current administration.

“While the current budget does set out measures to improve funding, these measures are based on the false premise of the metro having a funded budget. The striking down of the City Cleansing Levy prompts the council to adopt a reviewed funding plan,” he said.

He warned that further borrowing was unsustainable.

“The DA cannot support a loan facility in terms of a budget that is no longer credible. Not only will the metro be spending money it would not be able to collect, it will potentially be [borrowing] money it will not be able to pay back.

“We will be writing to National Treasury to ask their support in preparing a credible funding plan, as they did in previous years,” Brink concluded.

The FF Plus echoed the DA’s criticism but used stronger language, calling the overdraft increase reckless.

Grandi Theunissen, FF Plus leader in the council, said the ANC/EFF/ActionSA coalition had endangered the metro’s financial stability.

“The reckless financial management of the ANC/EFF/ActionSA coalition government in the metro places the metro’s fiscal stability at risk and leaves taxpayers with a growing debt burden,” Theunissen said.

He argued that the increase from a R600-million to an R800-million overdraft was not justified as a seasonal cashflow measure.

“The latest increase of the metro’s overdraft facility from R600 to R800-million is not only a sign of financial mismanagement, but a violation of responsible public financing,” he said.

Theunissen laid the blame at the feet of ANC deputy mayor and finance committee member Eugene Modise.

Under Modise’s leadership, he argued, the metro had embarked on ‘a path of debt-driven decline’.

He also condemned the June 2025 debt relief programme that wrote off R1.86-billion in residential and commercial arrears.

“In the meantime, the outstanding debt of residents and institutions has risen to R18.3-billion, with a 600% increase in new defaults within the 30 to 60 day period. This does not point to debt relief, but to debt spreading without accountability,” he said.

Theunissen described the current coalition’s policies as populist and irresponsible.

“The metro’s financial stability is not a laboratory for ideological experimentation. The current coalition has not only politicised the budget process, but has also undermined the institutional framework for good governance,” he warned.

The FF Plus has demanded that Modise explain both the legal foundation of the debt relief programme and its impact on the metro’s cashflow and creditworthiness.

“The protection of public funds is not a political option, it is a constitutional duty. The FF Plus will not sit idly by while fiscal recklessness threatens the future of the metro, and therefore voted against the item,” Theunissen said.

Do you have more information about the story?

Please send us an email to bennittb@rekord.co.za or phone us on 083 625 4114.

For free breaking and community news, visit Rekord’s websites: Rekord East

For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram or TikTok.