Treasury releases withheld municipal equitable share funds under strict MFMA compliance terms

Posted 28 July 2026 Written by Acts Online
Category Public Sector Compliance

Brought to you by SAnews: National Treasury has announced the conditional release of July 2026 equitable share allocations previously withheld from non-compliant municipalities, subject to strict reporting and consequence-management conditions.

In terms of section 216(2) of the Constitution of the Republic of South Africa, 1996, read with applicable provisions of the Local Government: Municipal Finance Management Act, No. 56 of 2003 (MFMA), National Treasury temporarily withheld transfer payments to 69 municipalities. The enforcement action followed widespread non-compliance, including the adoption of unfunded budgets, persistent accumulation of Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE), and failure to settle statutory obligations owed to Eskom, water boards, the South African Revenue Service (SARS), the Auditor-General, and pension funds.

While 20 of the affected municipalities have received their full allocation, 21 have received partial transfers, and 28 have not received allocations to date. Treasury confirmed that the decision to disburse remaining funds is a conditional measure aimed at preventing severe disruptions to basic service delivery, rather than an endorsement of municipal compliance under the MFMA or the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.

Compliance requirements and statutory deadlines

To retain eligibility for future disbursements in December 2026 and March 2027, affected municipalities must comply with a structured compliance programme and meet the following milestones:

  • 30 September 2026: First formal reporting deadline to submit compliance progress, quarterly reports, and supporting evidence to National Treasury.
  • 31 October 2026: Requirement to demonstrate formal legal processing of outstanding UIFWE matters recorded as at 30 June 2026.
  • 30 November 2026: Requirement to show demonstrable progress in advancing outstanding UIFWE matters through disciplinary board processes, financial recovery, and criminal proceedings.

National Treasury will issue formal directives to Provincial Premiers, MECs for Finance, and MECs for Cooperative Governance and Traditional Affairs (CoGTA) detailing strict conditions that will govern the potential withholding of the December 2026 equitable share instalment.

What this means for you, your business, or your clients

  • For yourself: No direct individual compliance obligations; statutory enforcement measures operate strictly at municipal government level.
  • For your business: Ratepayers, suppliers, and contractors doing business with non-compliant municipalities should monitor municipal cash flows closely, as continued funding tranches depend on strict adherence to statutory debt-settlement obligations with state creditors and bulk service suppliers.
  • For your clients: Municipal clients, accounting officers, and audit practitioners must ensure all outstanding UIFWE items as at 30 June 2026 are formally referred to disciplinary boards and relevant legal channels prior to the 31 October and 30 November 2026 statutory checkpoints to safeguard December 2026 grant disbursements.

Originally published at https://www.sanews.gov.za/south-africa/treasury-release-withheld-municipal-july-2026-equitable-share

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