Today's Labour News

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VBSCity Press reports that fears are mounting that up to 15 municipalities nationwide could collapse because they are not likely to recover their R1.5bn investments at VBS Mutual Bank.  

Their exposure to VBS was “too large compared to their operating revenue”, according to a Treasury document sent to the affected municipalities last week.  The SA Reserve Bank (SARB) placed VBS under administration in March, following a liquidity crisis.  VBS’s main source of cash was illegal short-term municipal deposits which it used to fund long-term loans to clients.  Senior Treasury officials fear that some of the municipalities – based in Limpopo, North West, Gauteng and Mpumalanga – could collapse, forcing their provincial governments to place them under administration.  The Treasury report reveals that the 15 councils are unlikely to recover their R1.5bn total investment.  A Treasury executive said this money was part of municipalities’ annual operating budgets and unfortunately “they have lost all that money and it is only a matter of time before you hear that some of them are not able to pay salaries.”  An executive SA Local Government Association (Salga) member said it was “almost a foregone conclusion that some of these municipalities will crash”.

  • Read this report by Sipho Masondo in full at Fin24

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