PRESENTATION TO PORTFOLIO COMMITTEE ON COGTA

Tuesday, 22 May 2012

JOINT PROGRESS REPORT BY DCOG AND PUBLIC WORKS ON PAYMENT OF INTERGOVERNMETAL DEBT

PURPOSE

To brief the portfolio Committee on progress made in by the task team terms of payment for intergovernmental debt

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OVERVIEW OF PRESENTATION

1. Introduction

2. Background

3. Status of municipal debt

4. Progress on payment of intergovernmental debt

5. Challenges

6. Wayforward

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IntroductionThe presentation seeks to provide progress since

29 November 2011This is the summary of what was done by the

task team of the steering Committee of the NT, COGTA, DPME and PW

The figures shown here are for quarter 1 and quarter 2

Quarter 3 reports are expected to be released in the next two weeks

The figures that will be presented will give a breakdown per province

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BACKGROUND

On the 3rd June 2011 the National Steering Committee was established to act on government debt.

The Steering Committee comprises CoGTA, DPME, National Treasury and National Public Works.

The Task Team piloted the first phase of the debt reduction project by analysing outstanding government debt due to eThekwini and Port St Johns municipalities.

The next phase targeted eighteen municipalities identified with the highest government debt balances according to the NT’s section 71 publications

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GOVERNMENT DEBT BREAKDOWN PER PROVINCE PER QUARTER: SEPTEMBER &

DECEMBER 2011

Province

As at 30 September

2011As at 31

December 2011Increase or decrease

Increase or (decrease) in %

Easern Cape 363 335 252 996 (110 339) (44)

Free State 359 576 439 890 80 314 18

Gauteng 869 669 744 478 (125 191) (17)

KwaZulu Natal 1 020 623 971 364 (49 259) (5)

Limpopo 221 876 256 178 34 302 13

Mpumalanga 253 691 219 519 (34 172) (16)

North West 455 000 351 248 (103 752) (30)

Northern Cape 234 672 170 675 (63 997) (37)

Western Cape 140 707 107 277 (33 430) (31) TOTAL 3 919 149 3 513 625 (405 524) (12)

Government debt comparison per province: September & December 2011

GRAPHICAL ILLUSTRATION OF GOVERNMENT DEBT COMPARISON PER PROVINCE: SEPTEMBER

& DECEMBER 2011

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PROGRESS ON PAYMENT OF INTERGOVERNMENTAL DEBT

The above table and bar charts shows the debt breakdown as at the end of the first and second quarter of the municipal financial year

The figures shows an improvement in government debt paid to municipalities

The positive movement is shown in seven of the nine provinces

FS and Limpopo has recorded an increase of debt by national and provinces to municipalities

This is in part due to the verification processes taking longer than expected

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GOVERNMENT DEBT AGE ANALYSIS (SEPT-DEC 2011)

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Debtors Age Sep-11 Dec-110 - 30 Days 705 015 413 738

31 - 60 Days 275 742 247 597

61 - 90 Days 364 904 262 097

Over 90 Days 2 562 395 2 589 742

Total 3 908 056 3 513 174

Government Debtors Age Analysis

CHALLENGES

The splitting of accounts into rates and municipal services is delaying verification (This is so because municipalities uses a comprehensive billing systems).

High rate of management turnover in municipalities affecting the sustainability of government debt initiative.

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Future Action

The task team will work on providing the committee with a break down per municipality and debt age analysis

That information will also provide information prior the devolution (a period up to the 31 March 2008).

The Task Team will continue to work with PW and municipalities in verifying the debt for payment

Work with Rural Development and Land Reform together with NDPW to facilitate the vesting of properties and vacant land.

Work with Human Settlement to facilitate endorsement of housing board properties and R293 townships.

Reconciliation of state immovable asset registers for all three spheres of government.

Encourage municipalities to enforce credit control action (disconnecting services11

Future ActionTask team will conduct municipal visits to assist

municipalities with the debt collection process once the municipality has submitted the information verified

COGTA has identified the 5 priorities to focus on in fastracking LGTAS and one of them is promoting sound financial management

The amendment of the MPRA will further assist in proper categorization of PSI like school

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PAYMENT OF NON RETURNING COUNCILLORS UPDATEWe have 3690 Councilors that had to be paid930 submission not yet received2398 have been paid out of the 2670272 still awaiting tax directive from SARSNot all of the 2398 received their monies305 have been declined by SARS and these

have been advised to contact SARS directly

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