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Johannesburg's Financial Mess

| News by Staff Reporter

The DA has released documents showing that Johannesburg has a financial deficit of billions of rands

The Democratic Alliance (DA) recently released documents showing that Johannesburg’s finances are R2,8-billion in deficit due to under-collection of revenue and overspending.

The deficit of R2,8-billion will be registered between January 2010 and January 2011.

Speaking at a press conference on Thursday DA mayoral candidate for Johannesburg, Mmusi Maimane said, “If Johannesburg is going to be able to deliver services, especially to the poor, its finances must be properly managed.

“Central to this is a functioning revenue collection system.”

He said the contents of the reports now being released to the public were of “serious concern”.

According to Maimane the African National Congress (ANC) had intened to keep the documents out of public circulation until after the municipal elections.

He said this was why the DA had decided to release the documents now.

He said most of the City’s municipal owned entities had recorded cash-flow problems.

“In general terms,” explained Maimane, “the report reveals that the City of Johannesburg has been operating at a significant deficit for a sustained period of time, as are those public entities reporting to it.

“As a result, the City has had to put in place a series of emergency measures to raise capital and manage its deficit. These measures have had some limited success over the past few months, but the City still faces a serious and deeply significant debt problem, one which is now threatening its ability to deliver those services expected of it.”

He said City Power, responsible for Johannesburg’s electricity distribution, had accumulated losses of R741-million, R676-million and R166,9-million in July, August and September last year respectively due to under-collection of revenue.

Johannesburg Roads recorded a loss of R112-million last year in July, while Johannesburg Water recorded a loss of R204,3-million during the same period.

“In all of these cases,” Maimane said, “the cash management report states that the losses were incurred either due to under-collection of revenue or overspending of budgets.

“This suggests that significant challenges exist with regards to financial management within MOEs (municipal-owned entities).

Source: www.bizpremises.co.za