National Treasury releases withheld municipal funds under strict conditions

National Treasury has announced that it will release withheld equitable share funding to affected municipalities on Friday, 31 July 2026, after withholding the allocations for nearly 30 days to enforce financial management requirements.

In a statement on Tuesday, the department said the decision was taken to prevent disruptions to basic municipal services, particularly those relied on by poor households, as the withholding period was due to end on Monday, 3 August.

Treasury stressed that the release does not signal the end of the matter, describing it as a conditional release aimed at safeguarding service delivery while compelling municipalities to address serious financial and governance shortcomings identified during the Section 216(2) process.

Investigations revealed that many municipalities face broader challenges beyond irregular, unauthorised, fruitless and wasteful expenditure (UIFWE). Treasury identified weaknesses in budgeting, cash-flow management, financial oversight, accountability and consequence management.

Officials also raised concerns that some municipal budgets do not accurately reflect their actual financial position, including available cash resources, revenue collection rates, outstanding creditors, bulk service obligations, employee costs and other financial commitments.

The assessment further highlighted failures by municipal councils, Municipal Public Accounts Committees, accounting officers and senior management to properly investigate financial misconduct, institute disciplinary action and implement consequence management where required.

National Treasury warned that it will intensify scrutiny not only of those responsible for irregular expenditure but also of officials and governance structures tasked with investigating and acting on financial misconduct.

Of the affected municipalities, 20 have received their full equitable share allocations, while 49 municipalities will receive outstanding allocations on 31 July. This group includes 21 municipalities that previously received partial allocations and 28 municipalities that had not received any funding due to non-compliance.

Treasury says it will continue working with municipalities to help them achieve compliance and avoid further equitable share withholdings scheduled for December 2026 and March 2027.