The National Treasury has revealed that municipalities owed creditors just over R 41 billion as at the end of last month. The Department briefed the Appropriations Committee in Parliament.

Municipalities are struggling to pay their bills. National Treasury says it will introduce a Contract Management system this year. This would assist municipalities to limit non-core priority spending. There will also be a system to reduce unfunded mandates.

While municipalities swim in debt, it has also emerged that national government departments owe local authorities just under R3 billion. Provincial governments are not too far behind, owing R 3.7 billion.

National Treasury says some of the debt is caused by structural and constitutional impediments, like in the Eskom situation.

“The problem is far wider than Eskom and water boards alone; government is indicating that one of our key priorities is job creation. That those small medium micro enterprises that deal with municipalities do not get paid within 30 days and actually the same government if you’re honest is actually destroying the jobs that we actually want to facilitate,” says National Treasury’s Jan Hattingh.