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About 40% of SA’s municipalities adopted unfunded budgets for 2020/2021, meaning that their expenditure was expected to exceed their projected revenue.

Finance minister Tito Mboweni said in reply to a parliamentary question this week that a total of 106 of SA’s 257 municipalities adopted unfunded budgets for 2020/2021. Adopting unfunded budgets is a violation of the Municipal Finance Management Act, which stipulates that municipalities base their budgets on a reasonable estimate of expected revenue. Often, however, municipalities overestimate their revenue, resulting ultimately in a financial crisis or their realistically anticipated revenue is insufficient to meet planned spending...

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