LETTER: A mechanism does exist to help municipalities pay their debts

There is indeed a mechanism to deal with this crisis. It is described in section 139 of the constitution, which mandates provincial governments to step in when local governments cannot pay their debts. The provinces must devise an appropriate recovery plan, which is binding on the indebted municipality.

In the Western Cape no municipality is in arrears with its financial obligations to Eskom. This has not always been so. Under the ANC, An investigation commissioned by the province showed some startling problems, including poor budgeting, weak controls, significant skills shortages despite a top-heavy administration, high cost of employees and a budget burdened by a supernumerary army of about 600 low-skilled people on the payroll.

Within 100 days many smaller creditors had been repaid and a repayment plan had been entered into with Eskom. All nonessential expenditure was minimised, an oversight committee was established to implement strict expenditure control, and within a year the Eskom debt had been fully repaid.

Source: Loan Digest (loandigest.net)

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