National Treasury Publishes Municipal Budget Data for 2024/25, Outlines Revenue and Expenditure Projections Across South African Local Government
By Thobeka Makume
The National Treasury has released the 2024/25 Medium Term Revenue and Expenditure Framework (MTREF), providing an in-depth overview of the financial projections for South African municipalities over the next three years. This framework, available on the Treasury’s website, highlights the expected revenue and expenditure trends, serving as a key tool for public accountability and financial transparency in local government.
“These budgets give an overview of expected revenue and expenditure trends in local government over the next three years,” said National Treasury on Wednesday. The published data includes detailed financial forecasts for each municipality, offering insight into the economic priorities and challenges faced by local governments across the country.
Key Highlights of the 2024/25 MTREF
The MTREF provides aggregated revenue and expenditure projections for the 2024/25 financial year and beyond. Here’s a breakdown of the most critical elements from this report, reflecting both the current financial landscape and the strategic focus areas for municipalities in South Africa.
1. Revenue and Expenditure Projections:
• The aggregated revenue for municipalities in 2024/25 is projected at R652.3 billion, with an increase to R687.2 billion in 2025/26 and R728.7 billion in 2026/27. These figures represent an anticipated steady growth in municipal revenue over the medium term.
• Municipal expenditure for the 2024/25 financial year is estimated to be R649.9 billion, with an increase to R682.7 billion in 2025/26 and R720.4 billion in 2026/27. This year’s expenditure is 6.2% higher than the budget adopted for the 2023/24 financial year, reflecting the rising costs municipalities are managing.
2. Projected Operating Deficits in 2024/25:
• A notable concern highlighted by the MTREF is the expected operating deficits for 2024/25. The anticipated expenditure increase outpaces revenue growth, signalling potential financial strain for many municipalities. This trend points to a challenging financial environment as municipalities grapple with balancing their budgets.
• However, the outlook is more positive in the later years of the MTREF, with operating surpluses expected in both 2025/26 and 2026/27. This improvement suggests that municipalities could stabilize their financial positions over time, provided they adhere to responsible budgeting practices.
3. Net Deficit and Expected Improvements:
• The MTREF projects a net deficit of R2.1 billion for the 2024/25 financial year, an improvement from the R9.3 billion deficit recorded in the 2023/24 adjusted budget. This deficit is expected to shift to a surplus of R520.4 million in 2025/26 and further increase to R4.3 billion by 2026/27.
• The gradual shift from deficit to surplus over the MTREF period underscores the National Treasury’s expectation of enhanced fiscal management at the municipal level.
4. Major Cost Drivers:
• The primary cost drivers for municipalities continue to be employee-related costs and bulk purchases, which account for 26.9% and 34.5% of operating expenditure, respectively. Municipalities face financial pressure due to high tariff increases in electricity and water, coupled with a decrease in sales volumes as consumption patterns evolve. Rising bad debt due to affordability challenges is also affecting municipal revenue.
5. Capital Expenditure and Infrastructure Development:
• Capital expenditure is projected to increase by 1.8% to R77.4 billion in 2024/25, compared to the original budget for the 2023/24 financial year. However, capital expenditure as a percentage of total expenditure is expected to decrease over the MTREF period. It accounted for 12.4% in 2023/24 and is projected to decline to 11.9% in 2024/25 and further to 10% by 2026/27.
• Trading services, which include utilities like water and electricity, represent 51.5% of total capital expenditure in 2024/25, increasing to 54.3% by 2026/27.
6. Infrastructure Investments:
• The 2024/25 capital expenditure budget includes R47.1 billion for new infrastructure projects, comprising 60.8% of the total capital budget. In contrast, the renewal and upgrading of existing assets receive significantly lower allocations of R13.3 billion (17.2%) and R17 billion (22%) respectively, reflecting a focus on new infrastructure over the maintenance of current assets.
7. Operational Repairs and Maintenance:
• Municipalities have allocated R33.9 billion to operational repairs and maintenance in 2024/25. This is projected to increase to R35.6 billion in 2025/26 and to R37.1 billion in 2026/27, demonstrating an ongoing commitment to maintaining municipal assets.
Importance of Public Access to Budget Information
National Treasury has emphasized the importance of transparency in municipal financial management. By publishing this budget data annually, Treasury aims to provide communities with the information needed to hold their municipal councils accountable. The MTREF, combined with other fiscal reports, helps the public monitor municipal spending and revenue generation.
“Regularly published budget information enables communities to hold their municipal councils to account,” said National Treasury. This transparency is essential for fostering responsible governance and ensuring that municipalities align their budgets with the needs of the communities they serve.
New Online Platforms for Public Engagement
To further enhance transparency, National Treasury has introduced several online platforms where the public can access municipal financial data. These include:
• Municipal Money: This open data portal (www.municipalmoney.gov.za) allows residents to explore financial data about their municipalities.
• Municipal Money Time Series Data: Available at http://municipaldata.treasury.gov.za, this portal provides access to historical financial data.
• GoMuni Portal: A new platform (https://lg.treasury.gov.za/ibi_apps/signin) for accessing municipal data, with a public access feature to facilitate engagement.
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