Treasury Withholds July 2026 Equitable Shares from 69 Municipalities

Posted 10 July 2026 Written by Acts Online
Category Public Finance

Brought to you by SAnews: National Treasury has invoked constitutional enforcement mechanisms to temporarily withhold the July 2026 equitable share allocations of 69 non-compliant municipalities.

In terms of section 216(2) of the Constitution of the Republic of South Africa, 1996, and the Local Government: Municipal Finance Management Act, No. 56 of 2003 (MFMA), the Minister of Finance, Enoch Godongwana, confirmed that the treasury has withheld allocations to enforce compliance with municipal financial management regulations. The action follows persistent failures by the affected municipalities to address critical financial governance issues.

According to National Treasury, the withholding of funds was triggered by municipal failure to address the following compliance areas:

  • Adoption of unfunded municipal budgets;
  • Accumulation of Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE); and
  • Failure to meet statutory obligations and settle outstanding debts with bulk suppliers such as Eskom, water boards, the South African Revenue Service (SARS), the Auditor-General, and municipal pension funds.

Sobering Financial Indicators

National Treasury highlighted severe financial mismanagement across local government spheres, noting the following cumulative figures:

  • Fruitless and Wasteful Expenditure: Municipalities have incurred R24.12 billion in fruitless and wasteful expenditure since the 2021–22 financial year.
  • Irregular Expenditure: Accumulated irregular expenditure has reached R145.21 billion, with R40.14 billion incurred during the 2024–25 financial year alone.
  • Unauthorised Expenditure: Municipalities disclosed R118.13 billion in unauthorised expenditure, with more than 50% of this sum allocated to non-cash budget items.

Remediation Requirements for Release of Funds

To secure the release of the withheld July 2026 equitable shares, affected municipalities must satisfy specific National Treasury directives depending on their area of non-compliance:

  1. Budget Rectification: Municipalities with unfunded budgets must collaborate with National Treasury officials to draft and implement a long-term budget recovery plan to transition to a funded status.
  2. Creditor Payment Schedules: Municipalities in arrears with bulk suppliers or statutory bodies must submit formal, binding payment schedules committing to debt settlement over time.
  3. UIFWE Resolution: The Municipal Public Accounts Committee (MPAC) must review the Auditor-General’s findings, submit formal recommendations to the municipal council, and ensure the council approves and implements consequence management protocols.

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

  • For yourself: No direct individual compliance obligations; professional awareness is required when advising public sector entities or municipal contractors.
  • For your business: Professional firms providing auditing, legal, or consulting services to local government must assess the heightened credit risk of the 69 affected municipalities and anticipate potential payment delays.
  • For your clients: Clients operating as municipal suppliers or contractors must review their outstanding invoices, verify if their municipal debtors are affected, and ensure any payment arrangements align with Treasury-approved debt-settlement schedules.

Originally published at https://www.sanews.gov.za/south-africa/south-africans-deserve-financially-sound-municipalities-godongwana

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