City Of Joburg Improves Revenue Collection, Moody’s Ups Rating

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The City of Johannesburg has upped its revenue collection rate to more than 90 percent with a positive cash balance of above R6 billion as at then end of 2020/21 financial year

“All of this has been achieved within the context of a deteriorating global economic environment,” said Julie Suddaby, the City of Joburg MMC for Finance.

Suddaby this week said the City had consistently demonstrated its financial resilience as evidenced by the generation of recurring surpluses, maintenance of substantial cash balances, stable debt ratios, and roll out of the capital expenditure programme.

In the period 2020/21, Suddaby said the City achieved a “strong financial position with a surplus of R3.9 billion, a R0.8 billion increase from R3.1 billion”.

Johannesburg also had a positive cash balance of R6.6 billion from R5.6 billion in 2019/20.

The City’s improved finances have been noted by the rating agency, Moody’s, which earlier this month, on 7 April, affirmed the Baseline Credit Assessment of Ba3, the Long-Term Global Scale Rating.

The rating agency affirmed the National Scale Rating issuer ratings of Ba3/A1.za for the City and changed the outlook to stable from negative.

Moody’s also affirmed the short-term National Scale Rating of P-1. za and affirmed the short-term Global Scale Rating of NP.

“This reflects Moody’s expectation that the City’s credit profile will remain in line with its current rating levels,” said Suddaby.

“The City’s Ba3 reflects Moody’s expectation that the operating environment will improve slightly as the national and local economies recover from the Covid-19 pandemic.”

However, significant structural challenges continue to weigh on the ratings of the City.

All in all the City achieved the following in 2020/21:

• A strong financial position with a surplus of R3.9 billion, a R0.8 billion increase from R3.1 billion.

• A positive cash balance of R6.6 billion from R5.6 billion in 2019/20.

• R6.9 billion (91%) spent of the approved capital budget of R7.6 billion (adjusted).

• A progressive increase in the City’s total assets by 5% compared to 3.5% in 2020.

• Increased in total revenue by 6% compared to 4.9% in 2020.

• Achieved a revenue collection rate of 90.3% against a target of 88.9%.