Matjhabeng in the Free State believes it can turn around its financial trajectory despite R16bn of debt, something the Auditor-General (AG) warned could prevent it from functioning, reports TimesLIVE.

The AG raised concerns in a 2021/22 report about the municipality’s debt exceeding its assets by R8.4bn and highlighted that it also incurred a deficit of R1bn.

Matjhabeng owes Eskom and Bloemwater R5bn each.

It is fourth-highest on the list of municipalities indebted to the power utility. Matjhabeng’s leadership said it could turn things around despite five consecutive years of AG audit reports warning of deteriorating finances.

Spokesperson Tshediso Tlali said municipal management was working hard to improve finances and had recruited senior revenue managers from National Treasury and the AG’s office.

Tlali said unlike last year, when the municipality operated from a deficit, it had recovered and there was a surplus in its operational budget.

However, its overall debt was R16bn and it was making monthly payments to creditors to chip away at this, he said, adding that non-payment for municipal services and outsourcing were responsible for Matjhabeng's troubles.

The AG's report said the municipality’s problems were due to a lack of effort in addressing previously identified internal control deficiencies relating to compliance, performance, financial reporting and information technology.

The AG highlighted some causes as being related to non-tax-compliant suppliers and a lack of subcontracting requirements on bid documents.

Tlali said this was due to incapacity in the supply chain management division, which new recruitment would resolve.

Full TimesLIVE report