Relief for seven KZN municipalities as National Treasury unblocks funds

Seven KwaZulu-Natal municipalities are among those receiving financial relief after National Treasury began releasing equitable share allocations that had been withheld over financial management concerns.

Earlier this month, National Treasury withheld equitable share allocations from 69 municipalities across the country in a bid to compel them to comply with financial management requirements.

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The seven KwaZulu-Natal municipalities affected are iMpendle, uMzinyathi District Municipality, Newcastle, eMadlangeni, Amajuba District Municipality, AbaQulusi and uMkhanyakude District Municipality.

National Treasury has since begun releasing the funds, with some municipalities receiving their full equitable share allocations and others receiving only part of the money that had been withheld.

iMpendle Municipality said it remained in talks with National Treasury over the release of its full allocation, but welcomed the partial release of the funds.

Our employees went through a lot because of the withholding of the funds as the municipality could not pay salaries. Now that part of the funds has been released, our number one priority will be to ensure that the salaries of our employees are paid.

“Having said that, I should indicate that talks between the municipality and National Treasury are continuing.

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“We are optimistic that the talks will yield positive results as it is critical for all the outstanding funds to be released so that the municipality can discharge its mandate,” iMpendle Municipality spokesperson Thami Mkhulisi said.

National Treasury director-general Duncan Pieterse maintained that withholding the funds had become necessary after the affected municipalities repeatedly failed to comply with financial management requirements.

However, the decision has drawn concern from several stakeholders, including Parliament.

During a joint parliamentary committee meeting last Friday, Co-operative Governance and Traditional Affairs portfolio committee chairperson Dr Zweli Mkhize warned that withholding the allocations could cripple the affected municipalities.

“The strong message from the committees is that we will act without reservation where the executive fails to act in accordance with the law to protect service delivery and takes steps that put the public in jeopardy,” he said.

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Parliament has since sought legal advice to determine whether National Treasury’s decision to withhold municipal equitable share allocations was lawful.

Finance Minister Enoch Godongwana said withholding the funds had been used as a “last resort”, but indicated that Treasury would comply should Parliament determine that equitable share allocations should not be withheld in future.

“We will make our submission to the parliamentary legal team which is looking at this matter,” said Godongwana.

But we think we are on the right track. Our view is that we are entitled to go up to 120 days [holding back these payments], for as long as Parliament has not said to stop.

“We will do whatever it takes to work with Parliament to deal with the issue of accountability, consequence management and support,” he said.

Part of National Treasury’s justification for withholding a portion of iMpendle Municipality’s equitable share was the municipality’s failure to settle fees owed to the Auditor-General.

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Mkhulisi confirmed that the municipality had since settled the debt. “Hence the decision to release part of the blocked funds,” he said.

According to Pieterse, National Treasury had resolved to release funds to 42 of the 69 affected municipalities after they complied with its directives.

Pieterse said the municipalities’ compliance demonstrated “the positive impact of the minister’s intervention”.

As of July 16, National Treasury had released R4,6 billion in previously withheld funds.