THE national Treasury has cautioned the Nelson Mandela Bay Municipality to tighten its belt and restrict over-expenditure.
While Treasury is happy with the city’s 2012/13 budget, it is still concerned that the municipality did not follow its advice and provide for two months’ capital reserves.
The budget was narrowly passed in June by making an allowance for only one month’s capital reserves.
According to the municipality’s Integrated Development Plan, it could provide for only one month’s working capital – about R120-million.
This means that if the municipality fails to maintain revenue collection at 95%, it could slip into another financial crisis.
In a letter from the Treasury’s chief director of local government budget analysis, Jan Hattingh, to the Bay’s acting municipal manager, Themba Hani, he said the city’s coffers would remain constrained if there was any significant under-performance in revenue collection.
Hattingh was providing feedback on the municipality’s adopted budget.
"Any significant under-performance in relation to debtor collections could place upward pressure on the municipality’s ability to meet its commitments.
"The municipality is therefore advised to continue implementing cost containment strategies and ensure that directorates do not overspend on their budgets,” Hattingh said.
He said they would monitor the municipality’s performance on a monthly basis and should the financial position deteriorate, Treasury would step in to assist.
Although it again offered its support to the municipality’s budget and treasury department in trying to develop and implement a long-term financial plan, it would only do so once a permanent municipal manager and chief financial officer were appointed.
Hattingh’s letter is expected to be discussed at a budget and treasury portfolio committee meeting on Wednesday next week.
DA caucus leader Leon de Villiers, who requested that the municipality get a feedback report from Treasury, said: "National Treasury have merely confirmed the concerns that the DA had with the 2012/13 budget, [which is] that we do not have the funds to host Afcon, which now stands at R43-million.”