Cooperative Governance and Traditional Affairs Minister Zweli Mkhize has urged municipalities, which invested in VBS Mutual Bank, to work on recovery plans to avoid possible service delivery disruptions.
"Provincial departments and the affected municipalities must work on recovery plans to augment possible service delivery disruptions due to the budget shortfall as a result of loss of investment," said the Minister.
Mkhize was on Tuesday speaking at a meeting with the mayors and municipal managers, whose municipalities are in the red, to offer them assistance.
A total of 14 municipalities invested funds in VBS Mutual Bank as part of short-term investments. As a collective, the municipalities invested an amount of R1.5 billion. The municipalities are from the North West, Limpopo and Gauteng provinces.
In March, VBS Mutual Bank was put under curatorship due to concerns over its liquidity and required reserves were raised late in 2017.
The meeting on Tuesday follows the commitment the Minister made during the presentation of his Budget Vote that the national department will engage affected municipalities.
"The meeting also discussed in detail the nature of these investments. Most importantly, the meeting looked at the possible impact that these investments could have on service delivery," said Mkhize.
All municipalities are expected to report back to the department.
"CoGTA will await the various processes including investigations by the South African Reserve Bank which CoGTA supports, and also committed to continue monitoring the situation that is unfolding with regards the investments made to VBS bank," said Mkhize.