National Treasury has frozen July 2026 equitable share transfers to 69 municipalities across all nine provinces, including Johannesburg, Mangaung, Nelson Mandela Bay, Buffalo City, Beaufort West, and Port St Johns, following recurring financial mismanagement. Treasury’s decision, announced on 7 July 2026, comes after findings of R145.21 billion in irregular expenditure and R24.12 billion in fruitless expenditure since the 2021/22 financial year, according to an official statement.

Official Reasons And Response From Treasury

According to National Treasury, withholding funds aims to enforce accountability after municipalities and their Public Accounts Committees repeatedly failed to address unauthorised, irregular, and wasteful expenditure. The department described persistent non-compliance as “a dereliction of fiduciary duties and [a] threat to financial sustainability.”

In a statement, Treasury said, “Billions lost to waste and irregular expenditure will no longer be tolerated. Municipalities must prove they can manage public money responsibly before receiving further transfers.” Treasury added that this measure is not expected to affect essential services in the short term, though this assurance has been challenged by some stakeholders.

Concerns Over Service Delivery And Wider Implications

The South African Local Government Association (SALGA), commenting on the move, warned that National Treasury “is compromising [municipalities’] ability to provide services.” SALGA argues that cutting funds places communities at risk by undermining the delivery of basic services such as water, electricity, and sanitation, especially in already vulnerable areas.

Collectively, municipalities owe Eskom R3.40 billion in interest and R1.21 billion to water boards, increasing pressure on local administrations to stabilise finances while maintaining services. Treasury has also flagged plans to deduct outstanding municipal debts directly from national and provincial department budgets to help settle these obligations. The effectiveness of these measures depends on improved oversight by Municipal Public Accounts Committees, which Treasury has criticised for failing to investigate financial mismanagement. The dispute highlights ongoing challenges in the municipal sector, reinforcing calls for reform and stronger accountability systems. The next developments are expected as Treasury assesses compliance before the next funding window.