Africa-Press – South-Africa. City of Johannesburg Finance MMC Dada Morero says the City is on the road to collecting 91% of its revenue needed to ensure the R80.9-billion budget.
Morero was speaking on the back of the recent GCR Ratings downgrade, which took the City’s national scale long-term user rating from stable to negative.
He said the downgrade was aligned with a worldwide economic downturn, citing a downgrade in the US as an example.
In a meeting last month with 15 of the City’s most significant ratepayers, seven had been on the brink of going bust, he added.
“We take the gradings seriously as a tool to determine performance. But we are still resilient. This doesn’t mean we are cash-strapped. We take stock of what the agency says, and we are preparing for the Moody’s [grading] in October.”
Morero said revenue collection in the City had gone from under 80% in February to 87% at present, adding that he believed they would reach 90% in October.
The City budget is based on an 87% revenue collection. Morero’s draft budget was based on a revenue collection rate of 91%, which the Treasury rejected as “unrealistic”.
This is an improvement from the last few years of revenue collections which were:
These results were influenced by the Covid-19 pandemic, which still negatively affects the economy.
In its downgrading last week, GCR said its outlook came from low-income growth, increasing expenditure, and “relatively weak” collection rates.
‘Governance weakness’
GCR, an affiliate of Moody’s Investor Services, believes that the City’s operating performance will remain weak and that there are risks to its turnaround plans.
Morero said:
The City’s consumers owed R46.2 billion as of the end the 2022 financial year, up from R40 billion in the previous year. This is more than double the R21.7 billion owed in 2018.
GCR also cited the City’s debt of R24 billion at the end of the 2022 financial year.
The City’s liquidity was also of concern, with its cash on hand at R3.2 billion as of 30 June 2023. This is down from R3.8 billion in 2022 and R6.6 billion in 2021.
The City needs R4.3 billion a month to operate.
On top of this, GCR said it continues to negatively view the sustained increase in unauthorised, irregular, fruitless and wasteful expenditure in its management and governance profile, which rose to R20.8 billion in the 2022 financial year.
“Whilst the metro’s various policies and procedures to reduce and investigate such expenditure are noted, these have had little impact on the outcome over recent years.
“At the same time, [the City] has faced ongoing political instability, with frequent changes in mayoral leadership, which we view as a governance weakness.”
For More News And Analysis About South-Africa Follow Africa-Press
