MFMA MUNICIPAL COST CONTAINMENT REGULATIONS

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The Minister of Finance has issued municipal cost containment regulations (Gazette Notice No. 42514 – 7 June 2019). The regulations are issued in terms of section 168 (1) of the Local Government Municipal Finance Management Act 56 of 2003 (MFMA).

The regulations, which affect all municipalities and municipal entities and apply to officials and political office bearers, have been issued to ensure that the municipal resources are used effectively, efficiently and economically.

The regulations cover the following matters:

  • Use of consultants;
  • Vehicles used for political office – bearers;
  • Travel and subsistence;
  • Domestic accommodation;
  • Credit cards;
  • Sponsorships, events and catering;
  • Communication;
  • Conferences, meetings and study tours; and
  • Other related expenditure items.

Municipalities and municipal entities must develop cost containment policies to give effect to the regulations and these policies must be adopted by the municipal council (or board of directors in the case of municipal entities) and reviewed annually.

Failure to comply with the regulations may result in the relevant officials and / or political office bearers being held liable for financial misconduct or a financial offence in terms of chapter 15 of the MFMA.

Municipalities and municipal entities must disclose all cost containment measures taken in their budget reports and annual cost savings must be disclosed in their annual reports. These reports must be copied to national treasury within 7 days after submission to the municipal council (or board of directors in the case of municipal entities).

The regulations take effect on 1 July 2019.

The full Gazette can be viewed online:

https://www.gov.za/sites/default/files/gcis_document/201906/42514gen317.pdf