- As of 31 March 2025, total consumers debt owed to municipalities amounted to R416.1 billion when compared to R347.6 billion that was reported in the same period in 2023/24.
National Treasury has published a report on local government revenue and expenditure for the third quarter of the 2024/25 financial year. This report covers the performance against the adopted budgets of local government for the third quarter of the municipal financial year ending on 31 March 2025 and includes spending against conditional grant allocations for the same period. In addition, National Treasury in its third quarter publication included the non-financial performance of MFMA Circular No. 88 Metro Indicators for the third quarter of 2024/25 Financial Year.
As at 31 March 2025, aggregate spending by municipalities was 64.9 per cent or R432.2 billion of the total adjusted expenditure budget of R665.9 billion. Aggregated billing and other revenue was 71.7 per cent or R478 billion of the total adjusted revenue budget of R666.8 billion. Capital expenditure was R26.4 billion or 33.6 per cent of the adjusted capital budget of R78.5 billion.
The adjusted operating expenditure budget was R587.5 billion, of which R405.8 billion or 69.1 per cent) was spent by 31 March 2025.
“A total amount of R10.8 billion or 2.6% has been written off as bad debt. The largest component of this debt relates to households and represents 72% or R299.5 billion (73 % or R253.6 billion in the same period in 2023/24 financial year),” National Treasury said on Wednesday.
The third quarter publication covers 257 municipalities on financial information and conditional grant information. The government debt accounts for 6% or R24.9 billion (R21 billion reported in the same period in 2023/24) of the total outstanding debtors. “Total outstanding creditors owed by municipalities as at 31 March 2025 amount to R131.8 billion an increase from R106.7 billion reported in the same quarter in 2023/24. R111.8 billion or 84.8% has been outstanding for more than 90 days,” said Treasury.
Provinces with the highest percentage of outstanding municipal creditors in the category greater than 90 days include the Free State at 94.4%, Mpumalanga at 93.9%, the Northern Cape at 93.8%, and the North West at 84.4%.
An increase in outstanding creditors could be an indication that municipalities are experiencing liquidity and cash challenges and consequently are delaying the settlement of outstanding debt owed.
“Analysis of the collection rates indicates that while municipalities’ average collection rate on the adjusted budget is 85%, the aggregated actual collection against billed and other revenue is only 63.6 percent. The metros budgeted (adjusted budget) for a 87.9% collection rate and collected only 58.2%. The secondary cities budgeted billing was 86.3% and the actual collection was 69.7%,” Treasury explained.
Author: Bryan Groenendaal
