On Tuesday, National Treasury announced it was temporarily withholding the July equitable share transfers to 69 municipalities as part of its efforts to enforce fiscal discipline and improve accountability in the management of public funds.
This affects municipalities in all provinces , including the City of Johannesburg.
The move by the Treasury is a positive step, as it ensures that municipalities put measures in place to prevent wasteful expenditure and hold those responsible accountable.
The Treasury says the move is intended to instil fiscal discipline and ensure that public money is properly managed. It aims to ensure that unauthorised, irregular, fruitless and wasteful expenditure is properly addressed.Where such expenditure is accompanied by financial losses, it undermines service delivery.
In addition, the failure to pay service providers results in disruption of essential services. This was evident last week in Ratanda where two men died during protests over water shortages.
The Lesedi local municipality, which the area falls under, owes Rand Water millions and has repeatedly failed to honour payment arrangements.
Figures from the Treasury show that since 2021/22, municipalities have incurred R24.12bn in fruitless and wasteful expenditure. During the same period, municipalities and their entities incurred irregular expenditure amounting to R145.21bn, with R40.14bn recorded in 2024/25 alone. Since 2021/22, municipalities have also disclosed a total of R118.13bn in unauthorised expenditure.
The Treasury’s intervention should encourage the municipalities to become fully compliant with the Municipal Finance Management Act.
The Treasury says the move to withhold payments is a temporary measure aimed at ensuring compliance.
While the SA Local Government Association (Salga) has acknowledged the importance of measures aimed at promoting sound financial management and accountability, it has also pointed out that local government continues to face structural and systemic fiscal challenges that require urgent support and reform.
Salga argues that any withholding of equitable share allocations must strike a balance between enforcing compliance and protecting service delivery and municipal financial sustainability. It further notes that many municipalities are grappling with severe fiscal and economic pressures that undermine both their financial sustainability and their ability to deliver essential services.
Meanwhile, the SA Municipal Workers’ Union has warned that the practical effect of the Treasury’s decision could push already struggling municipalities closer to collapse, with serious consequences for workers, communities and the delivery of essential services.
While these concerns should not be dismissed, municipalities must ultimately be held accountable for the responsible management of public finances. Fiscal discipline is not optional; it is essential for restoring public confidence and ensuring that taxpayers’ money is spent efficiently and transparently.
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