Fiscal consolidation plans should not limit delivery of basic services: Financial and Fiscal Commission

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As political parties convene to meet Tuesday’s deadline to seat counsellors and speakers in all 213 of the 257 municipalities, the Financial and Fiscal Commission is concerned that a decline in municipal budget allocations will affect service delivery.

The commission says allocations for local municipalities have declined by 0.1% over the next three years.

This after Finance Minister Enoch Godongawana during his Medium Term Budget Policy Statement (MTBPS) earlier this month, announced that municipalities will be allocated R450 billion over the next three years.

The video below is the 2021 Mid-Term Budget Policy Statement:

The Financial and Fiscal Commission says government’s fiscal consolidation plans should not limit the delivery of basic services to poor South Africans.

The commission says the poor will most likely bear the brunt of government’s spending reductions.

Chairperson of the Financial and Fiscal Commission Nombeko Bava explains.

“The commission acknowledges the difficulties with moderating debt within a subdued economic environment. It recommends improvements in cost efficiencies of spending and closing the fiscal leakages to offset the growing deficit and debt.”

“However, the commission remains firm on its stance that the need to exercise financial restraint to achieve fiscal prudence, must not come at a net cost towards the socio-economic conditions of our people.”

Municipal Finance Expert and Director at Third Republic, Paul Berkowitz says an increase in budget allocations will not solve municipalities’ financial problems.

He says better financial management through accountability and transparency is the only answer.

“eThekwini … the 3 years under [former mayor Zandile] Gumede, the irregular expenditure went from about R200 million to R3,2 billion. So an increase of R2 billion over three years in irregular expenditure.”

“So more money won’t solve the problem, it is about accountability, it is about appointing the right civil servants in a professional capacity. It is more about political culture of accountability and consequence and transparency,” adds Berkowitz.

The Auditor General’s report indicates that in the 2019-2020 financial year irregular expenditure among municipalities amounted to R26 billion.

The report showed that only 27 out of 257 municipalities received a clean audit.

Auditor-General Tsakani Maluleke briefs media on Audit Outcomes: