Govt’s new spending commitments to hit large municipalities

Municipalities, including major metros like Cape Town, will have to do more with less money from the fiscus.

FILE: Finance Minister Malusi Gigaba delivering the Budget speech in Parliament on 21 February 2018. Picture: Twitter/@GovernmentZA.

CAPE TOWN - National Treasury has warned major infrastructure projects in municipalities will be delayed as it looks to meet new spending commitments like fee-free higher education.

Municipalities, including major metros like Cape Town, will have to do more with less money from the fiscus.

Treasury says it wants to see large municipalities invest more of their own resources to fund infrastructure projects.

Over the next year, 9% of funds raised nationally will be allocated to local government.

Delivering his Budget address on Wednesday, Finance Minister Malusi Gigaba said local governments are still beset by financial management and governance challenges.

Municipalities are also not charging tariffs that reflect the full cost of the services they provide - particularly for water.

But they will have to reduce their reliance on government to fund infrastructure projects.

“Over the period ahead, we’ll review the effectiveness of these different support measures and introduce a new instrument designed to assist the turnaround of some of the most troubled municipalities.”

The government says it will be reviewing the efficiency and sustainability of municipalities housing and public transport policies.

WATCH: Gigaba delivers Budget speech

(Edited by Zamangwane Shange)