Budget and Financial Plan

Over the past financial years via sound and strong financial management, Bergrivier Municipality has moved internally to a position of relative financial stability. During the 2023/24 financial year, the municipality’s cash flow position is projected to increase at year end due to the municipality’s focus on ensuring a cash funded budget and strict cashflow management and budget control. In terms of our funding and reserves policy, we also focus on cash-backed reserves and provisions. This, however, remains a challenge due to extremely difficult economic conditions and the affordability of the municipal bill. There is also a high level of compliance with the MFMA and other legislation directly affecting financial management.

The Municipal Systems Act, Section 26(h) requires a municipality to include a financial plan, which must have budget projection of at least the next 3 years in the annual Integrated Development Plan (IDP). In essence, this financial plan is a medium-term strategic framework on how the municipality plans to deliver services within financial means.

The Bergrivier Municipality’s Medium-Term Revenue and Expenditure Framework (MTREF) materially complies with the latest budget regulations, as well as the requirements of the National Treasury (MFMA Circulars). This plan has been prepared taking in consideration the priorities and direction established by the municipality during the 2023/2024 budget deliberations.

The balancing act is to achieve the strategic objectives with available financial resources, and to always consider the effect of tariff adjustments on the community at large, and specifically the poor. In today’s difficult economic conditions, NERSA recently announced the tariff increases by Eskom to municipalities should be 18.49% and the tariff increases by municipalities to consumers should be limited to 15.9 % for the 2023/24 financial year. Other tariffs all increase by between 7% except for the refuse tariff where an increase of 20% is unavoidable to ensure the financial sustainability of the service. A new valuation roll will be implemented with effect from 1 July 2023 and the Municipality has projected that revenue from property rates will grow by 10%.

The financial principles and policies that the municipality has fundamentally adhered to for many years continues to lead the municipality’s financial stability and sustainability into the coming years. These principles and policies will establish the basic framework for the responsible management of the municipality’s financial resources.

An independent financial assessment done by INCA portfolio managers has resulted in the Municipality receiving an equivalent credit rating of A+ being Investment grade. This provides the platform whereby we have budgeted for external borrowing to finance Capital Projects in the amount of R 32 million for the 2023/2024 financial year with a total of R 91.9 million over the MTREF.

The financial position of the municipality is planned to remain healthy whereby we can comfortably cover our short-term obligations. The current ratio is projected at 314 % current liability coverage in 2023/24 and will remain above 300% current liability coverage over the MTREF.