South African Finance Minister Enoch Godongwana has announced plans to use his medium-term budget policy statement to introduce guidelines for local government to enhance spending and optimize savings. During a virtual plenary session in Pretoria, Godongwana responded to questions from MPs, including ANC's Seaparo Sekoati, who asked about measures to ensure good governance in municipalities that have had their funds withheld due to financial crises.
Godongwana revealed that the National Treasury is developing a plan to ensure high standards of saving and optimized spending at the local government level. However, due to the ongoing local government election process, the implementation of these measures will be delayed until after November 4. The minister emphasized that the Treasury is working with municipalities as institutions, rather than with their political leadership, to identify cost drivers and manage them within existing budgets.
The minister was also questioned by DA MP Kingsley Hope Wakelin about measures in place to ensure municipalities identify savings through the department's targeted and responsible savings system. Godongwana stated that the Treasury is working to lay the groundwork for each municipality to provide cost drivers, which will be managed to ensure that municipalities operate within their budgets. Once new leadership is appointed in municipalities, the process will be ramped up.
Sekoati asked Godongwana about regulatory or statutory measures used to ensure local government objectives are met through their spending. Godongwana replied that the National Treasury has introduced clear guidelines outlining spending parameters for local government and expectations on councils to avoid a fallout from equitable share allocations being withheld. These guidelines aim to prevent municipalities from misusing conditional grants.
Godongwana stressed that the Treasury does not take pleasure in withholding critical funding from local government but emphasized that the government needs to urgently address the financial crisis facing municipalities. The minister highlighted that a review of conditional grants will be tabled in the medium-term budget policy statement on November 21, which will help to prevent abuses of these grants going forward.
The National Treasury's move to introduce guidelines for local government spending comes after withholding equitable share funds from municipalities in financial crises. This decision was made to ensure that critical funding is used effectively and efficiently. Godongwana's announcement is seen as a step towards addressing the financial challenges facing local governments in South Africa.
The medium-term budget policy statement, set to be presented on November 21, will outline the Treasury's plans to support local government in improving spending and savings. The statement is expected to provide further details on the guidelines and regulatory frameworks being introduced to ensure that municipalities use funds effectively and efficiently. Key stakeholders will be watching closely to see how these measures will be implemented and their potential impact on local government finances.
Key points
- Minister Enoch Godongwana to unveil guidelines for local government spending in medium-term budget policy statement.
- National Treasury withholds funds from municipalities in financial crises to ensure effective use of critical funding.
- Guidelines aim to prevent misuse of conditional grants and promote optimized spending and savings at local government level.
