National Treasury Concerned Over Municipalities' Low Spending of Infrastructure Grants

The National Treasury expressed its concerns over the low spending of the infrastructure grants by municipalities in the second quarter of the 2023-24 financial year.

National Treasury released the local government revenue and expenditure report for the second quarter, from July 1 to Dec. 31 last year, which details the performance against the approved budgets of local governments and also evaluates spending against conditional grant allocations for the same period.

The report says that by Dec. 31, the municipalities had received R27.8 billion, which accounts for 63.5% of the R43.7 billion allocated in direct conditional grants for the second quarter.

National Treasury noted on Monday that the second quarter performance was not satisfactory, explaining that it is a source of concern "because this slow performance may eventually lead to unspent conditional grants that have to revert to the National Revenue Fund (NRF)," SA News reported.

According to the government department, surrendering unspent conditional grants to the NRF creates a negative effect on communities as they should receive services related to infrastructure projects.

"The Municipal Infrastructure Grant (MIG) is the highest performing direct infrastructure grant to municipalities during the second quarter, with a performance of 49.3%, which is higher than the 37.6% reported for the same period in the previous financial year," the department said.

The Integrated Urban Development Grant Water (IUDG) is the second highest performing grant with a performance of 46.7%. The MIG grant has been the highest performing grant for the third consecutive time as at the end of the second quarter year-on-year.

"The Municipal Disaster Recovery Grant (MDRG) had the lowest spending grant during the second quarter, with a 12.7% expenditure, equivalent to R40.1 million expenditure against the R320 million allocation," the department noted.

It explained that the Public Transport Network Grant (PTNG) is the second lowest performing grant with an expenditure performance of 25%, noting that the PTNG is an infrastructure grant allocated to metropolitan municipalities only and it is struggling to implement this program.

Aggregate municipal consumer debts were R338.2 billion in total, marking an increase from the R306.7 billion reported in the first quarter of the 2023-24 financial year.