Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)Chapter 13 : Resolution of Financial ProblemsPart 2 : Provincial interventions142. Criteria for financial recovery plans |
| (1) | A financial recovery plan must be aimed at securing the municipality’s ability to meets its obligations to provide basic services or its financial commitments, and such a plan, whether for a mandatory or discretionary intervention— |
| (a) | must— |
| (i) | identify the financial problems of the municipality; |
| (ii) | be designed to place the municipality in a sound and sustainable financial condition as soon as possible; |
| (iii) | state the principal strategic objectives of the plan, and ways and means for achieving those objectives; |
| (iv) | set out a specific strategy for addressing the municipality’s financial problems, including a strategy for reducing unnecessary expenditure and increasing the collection of revenue, as may be necessary; |
| (v) | identify the human and financial resources needed to assist in resolving financial problems, and where those resources are proposed to come from; |
| (vi) | describe the anticipated time frame for financial recovery, and milestones to be achieved; and |
| (vii) | identify what actions are necessary for the implementation of the plan, distinguishing between actions to be taken by the municipality and actions to be taken by other parties; and |
| (b) | may— |
| (i) | provide for the liquidation of specific assets, excluding those needed for the provision of the minimum level of basic municipal services; |
| (ii) | provide for debt restructuring or debt relief in accordance with Part 3 of this Chapter; |
| (iii) | provide for special measures to prevent unauthorised, irregular and fruitless and wasteful expenditures and other losses; and |
| (iv) | identify any actual and potential revenue sources. |
| (2) | In addition, a financial recovery plan— |
| (a) | for a mandatory intervention must— |
| (i) | set spending limits and revenue targets; |
| (ii) | provide budget parameters which bind the municipality for a specified period or until stated conditions have been met; and |
| (iii) | identify specific revenue-raising measures that are necessary forfinancial recovery, including the rate at which any municipal tax and tariffs must be set to achieve financial recovery; and |
| (b) | for a discretionary intervention may suggest for adoption by the municipality— |
| (i) | spending limits and revenue targets; |
| (ii) | budget parameters for a specified period or until stated conditions have been met; and |
| (iii) | specific revenue-raising measures that are necessary for financial recovery. |