Moody’s commends Steve Tshwete Municipality for its financial position

Reading Time: < 1 minute

Rating agency Moody’s has assigned long-term global and national scale ratings to the Steve Tshwete Municipality in the Eastern Cape. They reflect a track record of prudent governance and management practices.

Moody’s says the municipality has a track record of maintaining a robust liquidity position. 163 municipalities in the country have been classified as financially distressed. Moody’s has commended the Steve Tshwete Municipality for its consistent spending on capital infrastructure which it funds through its own sources, thereby reducing the need for debt financing.

In its latest report, Moody’s says the municipality has a strong level of collections which support its own source of revenue. Moody’s is however concerned that the municipality’s debt burden will almost double in the next three years reaching 41% in 2023.

This as pressure mounts for increased capital spending in order to meet the needs of the growing population. Moody’s has concurrently assigned a negative outlook to the Steve Tshwete municipality citing the country’s overall junk status rating and the budgetary pressure facing the municipality as it endeavours to manage an increasing debt level.

VIDEO: Ratings agency Moody’s downgrades five South African municipalities