Councillors in the eThekwini Municipality have expressed grave concerns over the municipality's financial state.
The financial state of the eThekwini Municipality is raising sharp scrutiny amid allegations that the municipality is in a financially perilous position, raising concerns about its credit ratings. Councillors in the finance portfolio committee raised these concerns following the committee meeting on Wednesday.
They claimed that the situation is so serious that even the ratings agencies have expressed concerns. However, the municipality pushed back against any worries related to the rating agencies, asserting that it is among the most highly rated municipalities in the country. The report tabled in the meeting states that the municipality still has the capacity to borrow but issued a warning on the ratings outlook.
The report indicated that, regarding the debt-to-revenue ratio, the municipality is currently generating adequate operating revenue to meet its short-term and long-term obligations. Under the burden-to-asset ratio, which indicates the extent to which net assets are funded from loan funds, the reported ratio of 9.94% is below the benchmark, indicating that the municipality has sufficient capacity to take on more debt.
