Moody’s downgraded the City of Johannesburg, City of Cape Town, the Nelson Mandela metropolitan municipality in the Eastern Cape, the City of Ekurhuleni’s water entity and the City of uMhlathuze municipality in KwaZulu-Natal, to between four and five notches below investment grade.
“The continued strain in the operating environment, as South Africa continues to battle the coronavirus through strict lockdown regulations, further exacerbates the pressures on the municipalities,” Moody’s said. “With the additional lockdown measures that have been applied, we expect to see a further decline in consumption spending, and therefore more pressure in municipal collection rates, and thus, operating and cash deficits.”Tsakani Maluleke said in June that local government finances had worsened in 2020, with R26-billion in irregular expenditure at municipalities, and only 27 out of 257 municipalities across the country managing to score clean audits.
“Now even the big municipalities and big metros are in a precarious financial situation,” Berkowitz said.