a) The Consolidated 2021/22 Audited Annual Financial Statements for eThekwini Metropolitan Municipality reported the following breakdown on Borrowings:
Total = R9.2 billion
It should be noted that in terms of Section 47 of the Municipal Finance Management Act, municipalities are not allowed to incur any debt in any foreign currency, and must ensure its debt is denominated in Rands.
b) As part of the oversight responsibilities, the National Treasury performs the following:
(i) The National Treasury analyses the borrowing capacity of a municipality by evaluating the size of the Gearing Ratios – total borrowing liabilities divided by the total operating revenue (also an indicator used to determine if a municipality is in financial distress).
(ii) When a municipality intends to borrow from the authorised financial service providers (lenders), they are required to obtain National Treasury’s views in terms of Section 46 of the Municipal Finance Management Act, 2003. A decision to borrow or not is the prerogative of a municipal council.
(iii) National Treasury has put in a place a Borrowing Policy Framework (which has been endorsed by Cabinet on the 17th of August 2022). The Policy sets out the following principles: