South African municipalities are experiencing liquidity and cash challenges this is after many of them reflected outstanding credits.
“The year-on-year increase in outstanding creditors could be an indication that municipalities are experiencing liquidity and cash challenges," read statement from National Treasury.
(READ MORE: S.Africa municipalities performing badly)
“Free State has the highest percentage of outstanding creditors greater than 90 days at 81.9 per cent, followed by Mpumalanga at 74.6 per cent and North West at 64.5 per cent respectively.”
On aggregate, municipalities spent 42.3 per cent, or 142.6 billion rand, of the total adopted budget of 336.8 billion rand as at 31 December 2014.
In respect of revenue, aggregate billing and other revenue amounted to 47.7 per cent, or 160 billion rand, of the total adopted revenue budget of 335.7 billion rand.
The capital expenditure amounted to 19.1 billion rand or 30.6 per cent of the main capital budget of 62.5 billion rand. In the previous financial year 32 per cent performance was recorded.
According to the budgeted monthly operational and capital expenditure, there is an under performance of 1.3 per cent or 1.9 billion rand on year-to-date revenue collection, 7 per cent or 9.2 billion rand on operational expenditure and 40 per cent or 12.7 billion rand on capital expenditure.
Similarly the performance against the adopted budget for the four core services for the secondary cities for the second quarter 2014/15 also shows surpluses against billed revenue without taking into account the collection rate.
(READ MORE: S.African municipalities underspend on budget)
“Water revenue billed was 2.6 billion rand against expenditure of 2.1 billion rand; electricity revenue billed was 7.8 billion rand against expenditure of 6.4 billion rand,” added the statement.
According to the statement, the revenue billed for waste water management was R1.1 billion against expenditure of 669 million rand and levies for waste management billed were 918 million rand against expenditure of 650 million rand.