National Treasury has released a report on Wednesday detailing local government revenue and expenditure for the third quarter of the 2024/25 financial year.
This report assesses the performance of municipalities against their adopted budgets for the period ending March 31, 2025, and includes spending on conditional grant allocations.
It also features non-financial performance data from Municipal Finance Management Act, (MFMA)Circular No. 88, providing insights into municipal service delivery.
Section 71 report aims to enhance transparency and oversight of municipal financial performance, serving as a management tool for municipal councils and provincial legislatures.
It allows for effective monitoring and timely improvements in municipal performance.
National and provincial treasuries prioritize the credibility of data, analysing submissions monthly and addressing errors with municipalities.
As of March 31, 2025, municipalities spent 64.9 percent, or R432.2 billion, of their total adjusted expenditure budget of R665.9 billion.
Billing and other revenue reached 71.7 percent, totaling R478 billion of the adjusted revenue budget of R666.8 billion.
Capital expenditure stood at R26.4 billion, or 33.6 percent of the adjusted capital budget of R78.5 billion. Municipalities spent R405.8 billion, or 69.1 percent, of the adjusted operating expenditure budget of R587.5 billion.
The budget for salaries and wages decreased from R162.6 billion to R161.1 billion, with R114.2 billion, or 70.9 percent, spent by the end of March.
Aggregate municipal consumer debts reached R416.1 billion, up from R347.6 billion in the same period last year.
Bad debts accounted for R10.8 billion, with households representing 72 percent of this debt. Government debt comprised 6 percent, totaling R24.9 billion.
Total outstanding creditors increased to R131.8 billion, with R111.8 billion, or 84.8 percent, overdue for more than 90 days.
Provinces with the highest overdue creditors included Free State, Mpumalanga, Northern Cape, and North West, indicating potential liquidity challenges for municipalities.
The average collection rate for municipalities is 85 percent, but actual collections against billed revenue are only 63.6 percent.
Metros aimed for an 87.9 percent collection rate but achieved only 58.2 percent, while secondary cities collected 69.7 percent against an 86.3 percent budgeted rate.
The report also includes non-financial performance data from metropolitan municipalities to improve transparency and accountability.
This data supports evaluations of municipal service delivery and operational effectiveness, providing a comprehensive view of municipal performance.
As of March 31, 2025, municipalities were allocated R44.7 billion in direct conditional grants, with R38.9 billion transferred.
National Transferring Officers reported R25 billion, or 55.9 percent, spent, while municipalities reported R19.5 billion, or 43.7 percent.
Several factors contributed to underspending, including late submissions of implementation plans and persistent procurement challenges.
These issues affected grant performance and led to reduced allocations for many municipalities during the adjustment budget process.
Infrastructure grant performance showed mixed results, with R23.8 billion, or 56.3 percent, spent from a R42.8 billion allocation.
Some grants, like the Integrated Urban Development Grant and Municipal Infrastructure Grant, demonstrated effective spending, while others, such as the Municipal Disaster Recovery Grant, lagged behind.
This inconsistency highlights the need for balanced grant management to address service delivery backlogs.
For further details, the report is available on the National Treasury website: www.treasury.gov.za.
This publication is in accordance with the MFMA and the Division of Revenue Act.
Municipal Managers and Chief Financial Officers submitted data to National Treasury by May 9, 2025.
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