National Treasury Freezes Payments to 69 Struggling Municipalities

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As stated in a Media statement by the Minister of Finance, National Treasury has temporarily withheld the July 2026 equitable share transfers to 69 municipalities across South Africa. Equitable share is an unconditional allocation from nationally raised revenue that helps municipalities provide basic services and perform their constitutional functions.

This action was taken under Section 216(2) of the Constitution and the Municipal Finance Management Act (MFMA). The Treasury says this is a corrective step, not a punishment.

Why Treasury Took This Step

Many of the 69 affected municipalities have repeatedly failed to manage public money responsibly, despite years of guidance and training from National Treasury. The specific problems include:

• Adopting budgets that are not properly funded

• Accumulating unauthorised, irregular, fruitless, and wasteful expenditure (UIFWE)

• Failing to pay Eskom, water boards, SARS, the Auditor-General, and pension funds on time

The scale of the problem is significant:

• Since 2021/22, municipalities have racked up R24.12 billion in fruitless and wasteful expenditure

• They have accumulated R145.21 billion in irregular expenditure, with R40.14 billion of that in 2024/25 alone

• 116 municipalities adopted unfunded budgets in 2024/25, which is nearly half of all municipalities in the country

• Municipalities owe R3.40 billion in interest to Eskom and R1.21 billion to water boards

These failures have put essential services at risk and damaged public trust in local government.

What Happens to the Withheld Money

The funds are not simply frozen. Instead, Treasury is redirecting the money directly to Eskom, water boards, and other statutory bodies to make sure electricity, water, and pension obligations are still covered. This protects residents from losing services while their municipality is under pressure to fix its finances.

What Municipalities Must Do to Get Their Money Back

Transfers will be reinstated once a municipality shows it is getting its house in order. The conditions include:

• Reducing irregular expenditure balances by 15% by August, and a further 15% by September

• Adopting a properly funded budget

• Having a functioning disciplinary board and showing that consequence management is happening

• Submitting written proof of compliance

Provincial treasuries will monitor progress, and National Treasury will continue to provide support.

Which Municipalities Are Affected

The 69 municipalities span all nine provinces:

• Eastern Cape: Buffalo City, Nelson Mandela Bay, Makana, Sundays River Valley, Inxuba Yethemba, Port St Johns

• Free State: Mangaung, Letsemeng, Kopanong, Mohokare, Xhariep District, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng, Nketoana, Maluti-a-Phofung, Phumelela, Mantsopa, Ngwathe, Mafube

• Gauteng: City of Johannesburg, Emfuleni, Lesedi, Sedibeng District, Merafong City, Rand West City

• KwaZulu-Natal: iMpendle, uMzinyathi District, Newcastle, eMadlangeni, Amajuba District, AbaQulusi, uMkhanyakude District

• Limpopo: Mopani District, Musina, Thabazimbi, Modimolle-Mookgopong, Fetakgomo Tubatse

• Mpumalanga: Victor Khanye, Emakhazeni, Nkomazi

• Northern Cape: Kamiesberg, Khâi-Ma, Ubuntu, Umsobomvu, Emthanjeni, Renosterberg, Thembelihle, Siyathemba, !Kai !Garib, Magareng, Phokwane

• North West: Madibeng, Kgetlengrivier, Tswaing, Mafikeng, Ditsobotla, Ngaka Modiri Molema District, Naledi, Mamusa, Dr Ruth Segomotsi Mompati District, City of Matlosana, Maquassi Hills, JB Marks

• Western Cape: Theewaterskloof, Laingsburg, Beaufort West

The Bigger Picture

The Finance Minister was clear that this is not a once-off action. It is part of a broader effort to restore financial discipline and accountability at the local government level. The minister said that restoring the credibility of public finance, at both local and national level, is a key part of South Africa's growth strategy.

Municipalities were given advance written notice of the potential withholding and were invited to submit written reasons why their funds should not be held back. Those that can show compliance will have their transfers reinstated.

The bottom line: Treasury is drawing a line. Municipalities that cannot manage public money will face real consequences, but those that fix their problems will get their funding back.