Cosatu concerned about rising municipal debt

Person writes out the word debt

2 minutes

The Congress of South African Trade Unions (Cosatu) says it is concerned by the rising municipal debt as it will affect basic services. This is after National Treasury issued a circular revealing that the total amount owed by municipalities has increased by R24 billion in the 2024/2025 financial year.

National Treasury has also revealed that the outstanding debt by municipalities stood at R128 billion in the 2024/2025 financial year.

This is an increase from R104.3 billion reported in the same period in the 2023/24 financial year.

“A decade ago, about 10% of municipalities were financially distressed, today it’s about 70%. We’ve witnessed about 36 municipalities struggling to pay salaries. There are about 160 municipalities that are in arrears on pension due to the employees. We see many municipalities especially in rural areas which cannot provide the most basic services as a consequence, they are closing these towns, retrench workers, are setting the communities into absolute poverty,” says Cosatu National Spokesperson Matthew Parks.

The Public Service Accountability Monitor says it is equally concerned but says strides are being made to address the problem.

“We are concerned about the ability of the state to meaningfully and progressively ensure those rights that are enshrined in Section 27 of the constitution (are protected). We do, however, note with some encouragement both in the State of the Nation Address and to some degree in the recent Budget Speech in which the Minister of Finance outlined plans to directly address failures at municipal levels. We do as PSM approach with some caution with positivity that municipal failures in this regard that occurred over several years, so it is high time that there is a much stronger collaborative intergovernmental approach to issues of debt management at municipal level,” says Programme Manager at the Public Service Accountability Monitor, Zukiswa Kota.