Abstract:
In terms of section 155(4) of the Constitution of the Republic of South Africa,
1996, all municipalities (metropolitan, district and local municipalities)
are expected to raise their own revenues in addition to the transfers they
receive from national government. This principle is an important feature
of any democratic local government system, creating a revenue-service
link between the municipality and its customers that empowers customers
to hold the municipality directly accountable for the services it provides.
However, municipalities’ own revenue collection has been significantly
declining as a result of greater reliance placed on intergovernmental
transfers as a revenue source. It is of concern that in many cases, the
funds dedicated to service delivery, development and growth are being
mismanaged by municipal officials, and in many instances due to political
interference. Therefore, the purpose of the study was to identify debt
management, its consequences, and the development of an integrated debt
management model for municipalities in the Free State Province.
This article provides a theoretical review of debt management,
legislative frameworks for local government financial administration as
well as the challenges facing municipalities in financial distress within the Free State Province regarding debt management. The article concludes
by discussing the integrated debt management model as a result of
conclusions drawn from the theoretical and the empirical study. The article
argues that the integrated debt management model as an intervention can
be operationalised to assist financially challenged municipalities in the
Free State Province with current debt management challenges.
