MUNICIPALITIES’ debts to Eskom to be written-off.
This includes Soweto, that owes billions as a result of non-payment to the utility.
During his Medium-Term Budget Policy Statement (MTBPS) on Wednesday, the Finance Enoch Godongwana announced that they received several applications from municipalities to have their debt totalling R56.8 billion written-off.
This is good news for broke and malfunctioning municipalities, but they must adhere to strict conditions, warned the minister.
Godongwana said it would have been counterproductive to address the Eskom problem without dealing with the municipal non-payment and the debt relief programme.
The debt relief arrangement for Eskom outlined in the 2023 budget noted that a large proportion of outstanding municipal debt is owed to Eskom.
“National government has introduced support to relieve municipalities of debt to Eskom. On application by municipality, the debt to Eskom up to 31 March 2023 will be written off over a three-year period in equal annual tranches.”
The minister also cited strict conditions that municipalities would have to respect and honour.
“These conditions include enforcing strict credit controls, enhanced revenue collection, and up-to-date payment of current account owed to Eskom.”
28 applications, Godongawana confirmed, were approved so far, with the remainder being assessed and verified with provincial treasuries.
These good news will be a sigh of relief for many, who struggle to make ends meet as economy shrinks and life expectancy becomes expensive everyday, especially poor communities.
With revenue less than projected, soaring debt-interest costs and an under-performing economy, the minister said that government planned to reign in its exorbitant spending bill, including shutting down some of the departments.
Meanwhile, Business Leadership SA- CEO, Busisiwe Mavuso, said that Godongwana’s speech was a good reality check.
“The minister has done a brilliant job of holding the line on fiscal discipline and that is vital to maintaining business confidence. There is a commitment to a number of important targets, including fiscal consolidation, reducing expenditure, no significant tax increases and so forth.”
Image (Finance minister Enoch Gondongwana says treasury has agreed to write-off billions owed to Eskom by municipalities).