Mangaung junk status: FF Plus will request Treasury oversight

29 May 2019

The Mangaung Metro Municipality is wrong to offer the poor economy, rising unemployment rate and higher tariffs as reasons for the possibility that the Metro might be downgraded to junk status.

The grading agency Moody's indicated that it is considering downgrading Mangaung to junk status in the near future if the Metro does not put its house in order soon.

The actual cause of the Metro's problems is poor municipal management by the ANC. The ANC is responsible for the vicious circle of decline in the Metro.

The Metro's financial recovery plan is too little too late. The recovery plan was implemented last June and still there is no improvement. Moody's intention to downgrade the Metro goes to show that the ANC offers no real solutions.

The Metro is simply unable to deliver services, implement financial discipline and, thus, ensure economic growth. The fact that the Metro's liabilities exceed its assets and that it is unable to meet its obligations is proof that the ANC is the root cause of the Metro's problems.

The FF Plus will officially request the National Treasury to oversee the Metro's recovery plan because history has taught us that the ANC will not be able to implement it.

In 2016, the National Treasury did warn against a long-term loan of more than R500 million as it put the Metro in an unsustainable financial position. The Metro council ignored the warning and proceeded to take out the loan.

In the meantime, the Metro is continually under financial pressure, service delivery is poor and taxpayers do not get value for their money.

The FF Plus will ensure that municipalities comply with their constitutional obligations as independent entities. An intervention by the Treasury is not ideal, but Mangaung clearly does not have the political will nor the ability to save itself from being downgraded to junk status.

Issued by Armand Cloete, FF Plus MP: National Council of Provinces (Free State), 29 May 2019