City's welcomes Moody's confidence in Cape Town's financial stability
The City of Cape Town's fiscal prudence and financial sustainability have been lauded by the international credit ratings agency Moody's. As a well-run city, we are encouraged by the affirmation of our rating of Aa3.za, which shows that our policies are working. Read more below:
Moody's rating of Cape Town shows that the City is maintaining its strong financial position, that its prudent financial policies are working, and that it can pay its accounts.
A strong rating allows for a lower interest rate on loans from banks and other financial institutions, which means that the cost of servicing the debt is lower. This places the City in a stronger financial position.
The stronger the City's financial position, the more resources can be allocated to our residents, particularly to those most in need of assistance.
The report notes: ‘Cape Town's financial governance is focused towards maintaining a financially sound municipality and the administration regularly monitors its budget execution and cash flows and is committed to reinforcing internal controls.
‘As in previous financial years, the City received an unqualified audit report for the financial year ending 30 June 2013. The City also merited a clean audit with respect to last year's financial performance. Notwithstanding its plans to significantly increase its capital expenditure, which will increase its financial leverage in the medium-term, the City follows prudent financial, debt and liquidity management policies'.
The City has again been rated at the high end of the six metropolitan municipalities rated by Moody's in South Africa.
The City's maintenance of its strong financial position is particularly noteworthy in light of the continuing economic volatility. A favourable rating from Moody's, one of the world's leading credit agencies, provides investors and the community with confidence in the financial leadership and management of this municipality. This confidence is further strengthened by the fact that Cape Town is the only metro to receive a clean audit from the Auditor-General.
According to Moody's report, the City increased its fixed asset spending by 40% year-on-year to R5,9 billion in the 2013/2014 financial year. Approximately 34% of this capital spending was on revenue-generating infrastructure assets in electricity, water and sanitation and on waste management services. The balance went mainly to transport, roads, and housing.
Statement issued by Ian Neilson, Cape Town Executive Deputy Mayor and Mayoral Committee Member for Finance, February 11 2014
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