adminAbel Zhakata Senior Reporter
GOVERNMENT has conditionally approved the Mutare City Council’s 2016 budget which did not meet required specifications, allowing the local authority to work on the grey areas in line with the audit report recovery plan.
In approving the makeshift budget, the Ministry of Local Government, Public Works and National Housing urged the municipality to tighten its belt and become more serious in doing business.
In a letter addressed to the Acting Town Clerk, Engineer Donald Nyatoti, dated February 4, 2016, Ms Erica Jones – on behalf of the permanent secretary, Engineer George Mlilo – said the local authority need to swiftly act on areas that needed attention.
“I wish to inform you that, although your budget did not meet the specifications required, the Minister has conditionally approved it so as to allow you to implement same and to facilitate activities while putting into operation the recovery plan,” reads the letter.
A total of 12 issues were raised which the ministry said were of high priority.
“Your budget performance indicates that your 2015 budget was not adhered to with some accounts performing at 42 percent and others at 185 percent.
“Please use your budget as your financial plan throughout the year and submit supplementary budgets where large diversions are experienced. You are also expected to learn from this when crafting your 2017 budget submission. The submitted performance contracted for the Town Clerk is not aligned to the budget. This same observation was made for the 2015 budget. Please ensure that when the new Town Clerk is appointed s/he has a contract that is aligned to the budget. We also expect performance management at all levels of the council.”
The ministry warned the local authority to keep its expenditure in tandem with income levels.
“Council’s creditors increased by 23 percent which is unacceptably high. Council is to reconsider its expenditure patterns and keep them within the income levels. You are expected to reduce existing creditors during the year.
“Council debtor levels increased by 28 percent indicating that you have not improved your debt collection strategies as directed last year. Your debt collection strategies in your recovery plan must be implemented and further debts should not be permitted to accrue,” reads the letter.
The local authority was ordered to work on the production of final accounts and be in line with the audit cycle by May 2017 and was reminded that any borrowing for capital development requires borrowing powers. Employment costs were deemed astronomical and using up a greater percentage of income generated.
“Your employment costs are at unacceptable levels and this aspect requires urgent attention; the budget submission is 53:47 but in reality it is more likely to be 70:30. Mutare is expected to bring its employment costs to the set 30:70 ratio forthwith and stern measures will be required. Senior management salaries should be rationalized as from 2015 and all allowances and perks outside the rationalized salaries should be stopped.
“Where necessary new contracts should be drafted and signed. Other measures, listed in the recovery plan should receive urgent attention. Efforts should be made to reduce employment costs arrears.”
The ministry said the local authority was shooting itself in the foot by not reviewing tariffs upwards or finding new sources of income despite the huge levels of debt.
“Despite the huge levels of debt council did not review tariffs upwards or bring in any new revenue sources. Council should look for innovations and possible increases in sub economic rates and submit a supplementary budget for approval of the same. Council is running the water account in deficit and yet it is ring fenced. There is need to ensure the ring fencing remains in place and monies owed for water chemicals are paid up to protect supply.
“All in all, Mutare City Council is going to have to considerably tighten its belt and be more serious in the collection of monies owed to it. Rate payers have to be kept informed of the precarious position of their city so as to gain their cooperation in the austerity measures that are put in place. The minister expects councilors to lead this process. Please note that the minister has indicated that this is the last sub-standard budget that he will approve for Mutare City Council.”
Online Reporter