THE City of Windhoek has not been paying back loans of more than N$300 million since last year, because millions of dollars of bad debts and outstanding Government subsidies have dropped the municipality into a cash-flow crisis.

The Namibian has reliably learnt that the City last serviced its "on-lending agreements" in August 2008 and that it is more than N$20 million in arrears.

The City's Strategic Executive for Finance, Roger Gertze, responded by saying that "the on-lending agreements and the status thereon are currently under discussion at (City) Council level as a confidential matter under separate cover".

As such, Gertze said, he could not comment on the paper's questions on the issue.

Information obtained by The Namibian indicates that, by March this year, the outstanding debt consisted of two loans from the European Investment Bank - one for nearly N$30 million and the other for about N$101 million. The City also owes the Development Bank of Southern Africa some N$161 million, and the KfW Mittelstandbank approximately N$46 million.

All these loans were guaranteed by Government, which means that the taxpayer will have to cough up the nearly N$338 million plus interest if the municipality defaults.

Enquiring who formally allowed the City to simply stop honouring their obligations, The Namibian was told: "We didn't apply for approval. There just wasn't enough money to meet the instalments."

The municipality also doesn't expect to be able to bring the payments up to date anytime soon, the same source said.

Government is apparently one of the main reasons that the City's pockets are empty.

The State subsidises local authorities throughout Namibia, but not the Windhoek Municipality.

In the City's 2009-10 budget, tabled at the end of June, the municipality used this as an excuse for the fact that "various studies indicated that the tariffs charged by the City rank as one of the highest in the region".

The City Council nevertheless went ahead and approved further rate hikes of between 10 and 15 per cent for this year.

Besides the fact that Government no longer subsidises the Windhoek Municipality, it allegedly owes the City about N$49 million from before 1998 when it still did so. On top of that, Government itself is apparently a slow payer when it comes to its municipal bills.

Furthermore it is believed that Government still owes the municipality millions for the initial development cost of the Ramatex site.

The City is also busy negotiating with Government to write off pre-independence municipal loans of about N$57 million plus interest.

Also sucking the City dry, are residents refusing to pay their municipal bills.

Outstanding debt, of which about 80 per cent is in arrears for three months or more, runs between N$220 million and N$218 million.

In the budget document, the municipality said that "under the prevailing socio-economic climate, the City will hardly recoup 50 per cent of the above amount."

The budget, however, only makes provision for bad debts of N$2 million.

In addition, the municipality seems to have scrapped its debt management incentive scheme. The City set aside N$105 000 last year to encourage residents to pay their bills, but no such provision has been made in the current budget.

According to the budget, the City intends paying N$19,7 million towards the redemption of external loans this year. Interest due on these loans amount to N$45 million for the year.

A total of N$39,4 million in instalments and N$58,6 million in interest have been allocated for internal loans. Some N$10,5 million will be paid on hire purchases, plus N$3,2 million interest.

The City's capital charges for 2009-10, comprising of redemption and interest payments, total N$176 million, which is 29 per cent more than last year.

Despite the municipality's dire financial predicament, the City Council approved N$1,573 million for the following: entertainment, CEO and special executives (N$140 000), entertainment Mayor (N$25 000), entertainment general (N$143 000), New Year's Eve celebration (N$215 000), sports and cultural promotions (N$95 000), staff social events (N$220 000), carnival and fun days (N$75 000), national sports and recreation games (N$100 000), annual award ceremony (N$10 000), sports and recreation (N$10 000) and arts and culture festival (N$550 000).

Also getting Council's thumbs-up were N$100 000 for Christmas lights, N$12 000 for copy-right fees for a musical, N$100 000 for the municipality's sport club or N$87 500 for a "fairwell" (sic) retirement donation. Plus N$132 588 for refreshments, 115 per cent more than last year.

And last, but not least: N$2,7 million for Mayor Matheus Shikongo and his 14 City Councillors for allowances this year.

Since this year's budget was designed to help Windhoekers "weather the storm at local level", the city's orphans and vulnerable children (OVCs) will, however, have to do with N$80 000 in 2009 and the elderly at the Katutura Old Age Home with N$47 000.

Plans to upgrade the old age home with N$500 000 were shelved, though. As were plans of N$100 000 to establish and upgrade playgrounds for the city's children. And N$15 000 for a road-crossing device for the blind.

The Council was lead by the municipality's vision to enhance the quality of lives of all the residents of Windhoek when they compiled and considered the 2009-10 budget, Chairperson of the Management Committee of the City Council, Elaine Trepper said when she tabled the document .

However, the Council did not allocated a cent for the City's Poverty Alleviation Strategy, its Private Public Partnership Strategy, as well as the survey on household subsistence level in the final budget. In the original budget, these projects received N$50 000, N$30 000 and N$10 000.