PORT ST JOHNS, Eastern Cape — The decision by the National Treasury to withhold municipal funds from 69 local authorities has placed a spotlight on the Eastern Cape’s Port St Johns municipality, prompting local leadership to address historical debt concerns while assuring residents of uninterrupted service delivery.
The National Treasury announced today that it is temporarily withholding a portion of the July funding allocated to the 69 selected municipalities. However, the department assured residents that this intervention will not disrupt basic service delivery.
The Deputy Director General (DDG) of the National Treasury, alongside other departmental officials, emphasized during a recent media briefing that the Treasury is prioritizing constant communication with the affected municipalities. The DDG noted that the department is actively working with local authorities to establish concrete payment plans to settle outstanding debts owed to key stakeholders, primarily Eskom and Amatola Water, before the withheld funds are released.
For Port St Johns, a relatively small municipality situated in the deep rural outskirts of the Eastern Cape, the financial strain is particularly acute. Unlike larger metros such as Nelson Mandela Bay and Buffalo City, Port St Johns operates on a much thinner budget and relies heavily on the unconditional grant for basic services to keep the town running.
In response to the Treasury’s directives, the municipality released a three-page document and held a media briefing to clarify its financial position. Local leadership stated they remain resolute in maintaining constant interactions with the National Treasury to resolve the disputes and finalize the requested payment plans.
The Acting Municipal Manager of Port St Johns clarified that the primary financial flag raised by the National Treasury relates to a historical liability with the South African Revenue Service (SARS). According to the Acting Municipal Manager, the debt stems from VAT-related transactions dating back several financial years. Following a formal audit and objection process, the initial amount was substantially reduced to R29 million.
“The municipality has since entered into a formal repayment agreement with SARS to reduce this particular amount,” the Acting Municipal Manager stated, addressing the core of the Treasury’s concerns.
Addressing community anxieties, the Acting Municipal Manager assured residents that the financial interventions would not impact daily life. “We want to assure our communities that the municipality does not anticipate any interruption to essential service delivery,” the spokesperson said, confirming that water, sanitation, municipal operations, infrastructure programs, employee salaries, and obligations to service providers will remain a priority.
Despite these assurances, the withholding of funds remains a critical concern for locals. Residents in the rural outskirts rely entirely on the municipality for basic services like water, sanitation, and electricity. There are growing fears that the municipality may be forced to introduce tariff hikes or other financial interventions to alleviate its accumulated financial burden, which could directly increase the cost of living for the community.
The funding dispute unfolds against a backdrop of intense legislative scrutiny. The municipality’s accounting officer (the municipal manager) and the executive mayor are currently locked in meetings with the provincial legislature’s portfolio committee on cooperative governance and traditional affairs. They are addressing the exact same financial and governance issues that were flagged by the National Treasury.
As the 69 municipalities await the release of their grants, the National Treasury maintains that clear, finalized solutions and repayment plans must be set in stone before the funding is handed over.
