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DA slams Joburg council's approval of R2. 5 billion loan

The City of Johannesburg council in Braamfontein has approved a R2.5 billion loan from the African Development Bank. Image: Nhlanhla Phillips / Independent Newspapers The City of Johannesburg council has approved a R2.5 billion loan from the African Development Bank (AfDB) for capital expenditure projects. The R2.5bn loan is amortising, unsecured, and payable over 15 years, and its indicative total cost will be about R4.94bn and quarterly repayments of just above R81.8 million. 'The total front-end fee of 1.15% of the total loan amount is due to the AfDB before loan signature. This equates to about R28.75m for a loan of R2.5bn,' read documents presented in council on Wednesday. The council also gave the green light to the city's top officials to negotiate and effect changes on the debt agreement should they be required to protect the city's interests as well as execute on the final terms of the long-term loan to be provided by the AfDB. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ However, DA shadow finance MMC Chris Santana said the party does not believe the city is in a position to take on more loans. 'It's with regret that I find the City of Johannesburg consistently trying to get long-term funding, in essence, trying to fund short-term funding. We are currently in a position where we do not have a funded budget,' he said. According to Santana, the collection rate is still behind the budgeted collection rate of 89%. He said it currently stands at 85% and that the repayments due per quarter on all loans will be almost over R400 million based on three loans. 'We are already sitting with a cash crisis and a cash crunch. We don't need this loan; the only reason I think we need this loan is to settle the short-term loan of R2.8bn from the DBSA (Development Bank of Southern Africa) that's coming up at the end of this month, June 30. 'We are stealing from Peter to pay Paul at this point,' Santana explained. He accused the municipality of sending back free money to the National Treasury. 'If we are sending back free money, why must we go loan money?' he asked.