South Africa’s National Treasury says the temporary funding freeze is aimed at restoring fiscal discipline and accountability after years of non-compliance with financial regulations….reports Africa Daily News Desk
South Africa’s National Treasury has announced the temporary withholding of July 2026 equitable share transfers to 67 municipalities across the country, including the City of Johannesburg, in a move aimed at enforcing fiscal discipline and addressing persistent financial mismanagement.
The Treasury said the decision followed repeated failures by the affected municipalities to comply with the Municipal Finance Management Act (MFMA) and related regulations despite years of guidance, engagement and support from the government.
Among the municipalities affected are Johannesburg, Buffalo City, Nelson Mandela Bay, Mangaung, Emfuleni, Newcastle, Nkomazi, Musina, Mafikeng and Beaufort West, spanning all nine provinces. The municipalities had been notified in advance and were given an opportunity to explain why their transfers should not be withheld before the decision was implemented.
The Treasury stressed that the withholding of funds is a corrective rather than punitive measure and said it does not expect any immediate impact on service delivery because the transfers are being suspended only temporarily. The funds will be released once municipalities demonstrate compliance with the required financial management conditions.
According to the statement, National Treasury has for several years provided municipalities with technical guidance through MFMA circulars, direct engagements and training programmes. Despite these interventions, many municipalities have continued to adopt unfunded budgets, fail to address unauthorised, irregular, fruitless and wasteful expenditure (UIFWE), and neglect statutory financial obligations.
The Treasury warned that poor financial governance is threatening the sustainability of key public institutions, including Eskom and water boards, while also affecting payments to the Auditor-General of South Africa, the South African Revenue Service and the Financial Sector Conduct Authority. It added that delayed payments to suppliers often result in additional interest charges, penalties and disruptions to public services.
The statement further noted that several municipalities had failed to process cases of unauthorised, irregular, fruitless and wasteful expenditure through their Municipal Public Accounts Committees (MPACs), as required under the MFMA. It also found that many municipalities had not implemented consequence management, including disciplinary proceedings, recovery of financial losses and criminal referrals where appropriate.
National Treasury cited the latest Auditor-General’s 2024/25 Consolidated General Report on Local Government Audit Outcomes as evidence of persistent weaknesses in municipal financial management.
According to the report, municipalities have incurred R24.12 billion in fruitless and wasteful expenditure since the 2021/22 financial year and R145.21 billion in irregular expenditure over the same period, including R40.14 billion during 2024/25 alone. Municipalities have also disclosed R118.13 billion in unauthorised expenditure since 2021/22, while 116 municipalities adopted unfunded budgets during the 2024/25 financial year.
The report further showed that municipalities owed R3.40 billion in interest to Eskom and R1.21 billion to water boards by the end of the 2024/25 financial year. In addition, 48 municipalities had third-party deductions that remained unpaid for more than one month.
The Treasury said these findings demonstrate continued non-compliance with the country’s financial management framework and underscore the need for stronger accountability in local government. It added that it would continue working with municipalities, provincial treasuries and cooperative governance structures to improve financial management and restore compliance. Transfers will resume once the affected municipalities provide evidence that they have met the required conditions.
