The broke Amathole District Municipality (ADM) will now pay its employees their salaries.
Mayor Khanyile Maneli said the internal circular – in which workers were informed that they will not receive salaries for February, April, May and June – had been withdrawn.
In a statement on Tuesday, Maneli said the withdrawal followed meetings with the national and provincial governments 15 January.
“The meeting resolved on the establishment of a multi-disciplinary task team whose task is to strengthen and implement a sustainable financial recovery plan for the Municipality,” Maneli said.
“We have full confidence in the engagements of the task team that they will yield positive results, hence the withdrawal of the initial circular.
“I must reiterate our commitment as the leadership of the institution to turn the fortunes of our district for the better whilst servicing our communities.”
The 1,670 workforce which includes municipal workers, councillors and traditional leaders, costs ADM a staggering R65m per month in salaries.
For the past two years, the council has been heavily relying on bank overdrafts to pay its workers.
Municipal manager Thandekile Mnyimba said this was a costly exercise and unsustainable in a long run.
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Mnyimba previously revealed several factors that had contributed to the financial crisis at the municipality.
He pointed to an unaffordable salary bill, adding that it was caused by the recategorisation of the municipality from Grade 6 to 7.
This meant salaries and benefits of workers of the district authority were on a par with those of people working for a metro.
This was approved by Mnyimba’s predecessors before he joined ADM.
But SA Municipal Worker’s Union dismissed Mnyimba’s version and blamed him for alleged financial mismanagement, maladministration, fruitless and wasteful expenditure and outsourcing of contracts.
The establishment of the Amathole task team comes a week after the DA in the Eastern Cape wrote a letter to Cogta MEC Xolile Nqatha, asking him to establish a specialised task team to evaluate the financial sustainability of all the municipalities in the Eastern Cape and to carry out a complete re-estimation of which municipalities are in distress so that the necessary preventative measures can be employed to save failing municipalities.
The party said the financial crisis at ADM was just the tip of the iceberg as 24 of 39 municipalities in the province are standing on the edge of a fiscal cliff.
DA provincial deputy chairperson and Cogta spokesperson Vicky Knoetze warned that urgent intervention was needed to prevent many municipalities from collapsing like the ADM had.
On Tuesday, Knoetze said while the party welcomed the intervention at ADM, the DA would monitor the progress of the task team very closely and ensure that the tough decisions are made.
“It is vital that similar interventions be rolled out to other distressed municipalities across the province, if we are to prevent the total collapse of local government,” said Knoetze.