National Treasury Withholds July 2026 Equitable Share Transfers to Non-Compliant Municipalities

Posted 08 July 2026 Written by Acts Online
Category Local Government

Brought to you by SAnews: National Treasury has temporarily withheld the July 2026 equitable share allocations to 69 municipalities due to persistent non-compliance with statutory financial obligations and failure to submit signed creditor payment plans.

In terms of National Treasury’s enforcement powers under the Local Government: Municipal Finance Management Act, No. 56 of 2003 (MFMA) and the annual Division of Revenue Act, the department has withheld approximately R13.5 billion of the R100 billion total equitable share allocation. The enforcement action follows formal notices issued on 22 and 23 June to 99 municipalities. While 30 municipalities responded adequately to avoid the withholding, 69 failed to comply with Treasury’s directives.

To secure the release of the withheld funds, affected municipalities must submit signed payment plans agreed upon with their creditors, including water boards and Eskom. National Treasury indicated that once these payment plans are submitted and verified, the withheld portions will be released incrementally to settle outstanding debts directly, after which the remaining equitable share balance will be transferred.

The corrective measure targets critical financial management failures, including:

  • Failure to pay statutory obligations, such as transferring employee pension fund contributions deducted from salaries;
  • Adopting unfunded municipal budgets in violation of MFMA requirements; and
  • Accumulating unauthorised expenditure due to poor planning and overspending.

National Treasury, in collaboration with provincial treasuries, has established a framework to assist municipalities with consequence management, budget alignment, and planning systems. This intervention aims to prevent the surrender of unspent infrastructure and operational grants back to the National Revenue Fund.

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

  • For yourself: No direct individual compliance obligations; professional awareness of municipal credit risks is advised when residing or operating in affected municipal jurisdictions.
  • For your business: Firms providing goods or services to South African municipalities must closely monitor the compliance status of municipal clients, as payments may be delayed or routed through Treasury-approved payment plans.
  • For your clients: Municipal clients must immediately draft, sign, and submit formal creditor payment plans to National Treasury to secure the release of their July 2026 equitable share allocations and avoid service delivery disruptions.

Originally published at https://www.sanews.gov.za/south-africa/withholding-municipal-equitable-shares-corrective-not-punitive-says-treasury

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