The National Treasury has lifted its freeze on R7.1 billion in equitable share transfers for 49 municipalities after initially withholding R13.5 billion from 69 councils in July 2026 due to longstanding financial mismanagement and non-compliance with the Municipal Finance Management Act, according to official statements from the Ministry of Finance.

Conditional Release To Protect Basic Services

Finance Minister Enoch Godongwana stated that the intervention was a “corrective” measure rather than punitive, with the intention of enforcing fiscal discipline and legal compliance. Godongwana said, “This decision is not punitive; it is corrective. It is designed to instil fiscal discipline, protect public money, and ensure that municipalities comply with the law,” during a media briefing in Pretoria.

The Treasury began releasing funds on 17 July 2026 to municipalities which demonstrated efforts to settle creditor debts and implement governance measures. By 28 July, 49 councils had met Treasury’s requirements, having addressed issues identified under Section 216 subsection two of the Constitution. This included the City of Johannesburg, where R3.6 billion was reinstated following compliance with Treasury conditions as confirmed by a Treasury spokesperson.

Widespread Mismanagement And Ongoing Oversight

The withholding of funds followed a period where municipalities accumulated a collective R287.46 billion in unauthorised, irregular, fruitless, and wasteful expenditure since the 2021/22 financial year, as reported by the National Treasury. Government officials cited these figures as evidence of endemic governance and accountability problems requiring urgent intervention.

Godongwana said the restored funding represented a “conditional release intended to protect basic service delivery while requiring affected municipalities to correct the serious weaknesses identified”. The Treasury’s actions drew attention to continuing challenges in local government financial oversight and echoed previous calls for tighter enforcement of municipal finance legislation across South Africa.

Treasury officials confirmed that further allocations remain suspended for municipalities yet to show tangible improvements in financial management practices. Future transfers will depend on demonstrable efforts to rectify audit findings and stabilise governance structures.

The Treasury is expected to conduct further assessments and issue updates on remaining withheld allocations in the coming weeks.