Global Credit Rating Co. Gives City Finances the Bill Of Health
17 October 2018
Today, Global Credit Ratings Co. has accorded the City of Johannesburg Metropolitan Municipality a long term national scale Issuer rating of AA(ZA), and a short term rating of A1+(ZA). The outlook is accorded as Stable.
The rating is defined as being of a “Very high credit quality. Protection factors are very strong. Adverse changes in business, economic or financial conditions would increase investment risk although not significantly.’’
Despite the challenges faced by the City, this rating demonstrates the confidence which investors can place in the financial position of Johannesburg and its potential for growth.
City has consistently demonstrated its financial resilience as evidenced by the generation of recurring surpluses, maintenance of healthy cash balances and the continued roll out of the capital expenditure program. All of this has been achieved within the context of a deteriorating global economic environment.
The recent rating also continues to demonstrate that the dooms day prophets who predicted the ‘imminent’ financial collapse of the City were plainly wrong. Indeed, this has even been the false premise on which the ANC has based numerous baseless accusations against the City.
The reality is that the City’s past credit ratings were based on the previous government’s deception of the World Class African City. The past ratings did not address the true balance sheet of the City and considering the magnitude of corruption and maladministration along with the City’s historically flawed billing system and massive R18 billion debtor’s books.
In recent times the City has begun to make significant progress in stabilising the finance department and prioritising expenditure towards addressing the R170 billion infrastructure backlog that has inherited. The City has begun to demonstrate economic strength by achieving two consecutive quarters of job creation, seeing 109 000 new people entering the job market.
In addition to this, the recent investment of R2 billion in the inner city by Divercity Urban Property Fund, the largest in the Johannesburg CBD for some years, also serves as an indication of investor’s renewed faith in Johannesburg’s prospects.
It is now time for the ANC to come to terms with the financial and corrupt mess they left behind and the improvements that are now being achieved.
Johannesburg is the economic heartland of South Africa, with a diverse economy accounting for around 15% of the country’s GDP. According to the rating agency, social indicators are mainly above the national average.
From a finance perspective, the City achieved another unqualified audit in FY17, whilst five municipal entities received clean audits. Johannesburg has demonstrated strong access to debt facilities from a wide range of sources, including commercial banks, development agencies and the capital market and also maintained stable debt ratios, all of which serve to lower risk to investors and stakeholders.
In addition, the City recently reported that it’s spend of the capital budget reached 91% and 98.5% of its spending on infrastructure grants by the end of the 2017/18 financial year.
The multi-party government does not regard even these improvements to be good enough, and will continue to strive for excellence in the City of Johannesburg.
I would like to express my appreciation to the MMC for Finance, Cllr Funzela Ngobeni, for his continued leadership within the Finance Department and the improvements we are progressively seeing in the City’s financial performance.
Finally, I would like to express my most sincere appreciation to the law abiding residents of our City and assure them that our efforts in combatting fraud and corruption will see our expenditure directly benefitting their communities.
Issued by Luyanda Mfeka, Director: Mayoral Communications, Office of the Executive Mayor, City of Johannesburg, 17 October 2018
