1 PRESENTATION TO THE PORTFOLIO COMMITEE ON

Transcript:1 PRESENTATION TO THE PORTFOLIO COMMITEE ON:
1 PRESENTATION TO THE PORTFOLIO COMMITEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS REPORT ON COMPLIANCE BY MADIBENG LOCAL MUNICIPALITY AND SUPPORT PROVIDED BY PROVINCIAL TREASURY 2 Presented by: Ms M Rosho MEC for Finance TABLE OF CONTENTS Purpose Background Compliance Matters 3.1 Budget Management 3.2 Budget Implementation and Performance 3.3 Reporting 4. Financial Health 5. Support 6. Conclusion 3 To provide the Portfolio Committee with a report on compliance by Madibeng Local Municipality and support provided by Provincial Treasury 4 PURPOSE BACKGROUND In terms of the Constitution of the Republic of South Africa, National and Provincial governments are required to support and strengthen the capacity of municipalities to manage their own affairs (S154), have the executive and legislative authority to see to the effective performance of municipalities (S155) and can regulate the exercise of a municipality’s executive authority (S155). The Provincial Treasury has a responsibility to provide technical support in building financial management capacity, resolution of municipal financial problems through the development of financial recovery plans, transparent reporting and support municipalities to strengthen fiscal discipline. The primary focus of the support and capacity building initiatives is on improving budget compliance which requires adoption of a funded budgets, management of the revenue value chain. 5 COMPLIANCE – BUDGET MANAGEMENT Section 18 of the MFMA promotes adoption of funded budgets by municipalities Adopting a funded budget by a municipal council is the first and critical step in a chain of events that must be achieved The budget sets the financial plan aligned to the IDP of the municipality for implementation. Madibeng Local Municipalities have annually for the past three (3), consecutively adopted an unfunded budget This subsequently resulted in Madibeng finding itself in financial distress, meaning that even before the start of the financial year, expenditure needs will exceed available revenues. 6 Section 16(2) of the MFMA prescribes that the Mayor of the Municipality must table the annual budget in Council meeting at least 90 days before the start of the budget year. Section 24 (2) (a) requires Municipal Council to approve annual budget before the start of the financial year. As reflected on the table below, Madibeng LM tabled and adopted both 2019/20 and 2020/21 budget in accordance with the legislation requirements. 7 COMPLIANCE - MFMA CHAPTER 4 BUDGET 8 MFMA CHAPTER 4 BUDGET COMPLIANCE The table above reflects the 2020/21 budget as approved by the municipal Council The budgeted operating