Municipalities in South Africa are expected to blow their budgets next year because of two blows.
South Africa’s municipalities are expected to blow their budgets in the coming financial year, National Treasury warns, with costs being driven up by rising prices and lower sales due to households being hit by affordability issues.
“Municipalities will realise operating deficits on the operating budgets in the 2022/23 financial year as the total operating expenditure increases at a higher rate than the revenue projections,” Treasury said. A net deficit of R269.6 million is expected in the 2022/23 financial year, which is expected to improve to a surplus of R3.5 billion in 2023/24 and R7.3 billion in 2024/25;
The revenue and expenditure numbers are aggregated from the annual budgets that municipal managers are legally required to submit to the National Treasury and the relevant provincial treasury. The 2022/23 capital expenditure budget reflects a R43.8 billion investment in new infrastructure, which is 62.8% of the total aggregated capital budget. Investment in the renewal and upgrading of existing assets is much lower at R10.9 billion and R15.1 billion of the total capital budget, respectively; and
To improve the quality of reporting, the Municipal Budget and Reporting Regulations promulgated in 2009 prescribed new budget reporting formats for municipalities. In terms of the 2009 regulations, municipalities had to submit their 2022/23 MTREF budgets in the prescribed A1 Schedules as per the regulations.
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