Treasury defends decision to withhold R13.5bn from municipalities

National Treasury has defended its decision to withhold R13.5 billion, of which the City of Johannesburg owes R3.6 billion in equitable share transfers from municipalities.

National Treasury froze July 2026 equitable share transfers to 60 municipalities across South Africa, citing persistent financial mismanagement and staggering levels of unauthorised, irregular, fruitless and wasteful expenditure (UIFWE).

The suspension affects municipalities across all nine provinces, including major metros such as Johannesburg, Mangaung and Nelson Mandela Bay, as well as smaller towns like Buffalo City, Beaufort West and Port St Johns.

Councils were given written notice and the opportunity to respond before the decision was taken. Transfers will resume only once municipalities demonstrate compliance and provide proof of corrective action.

Gaarekwe said Treasury also demanded signed payment plans from municipalities owing billions to creditors, including Eskom, water boards, SARS, and pension funds.

“Once municipalities submit proof of agreements and partial payments, withheld transfers will be released. It means funds could be withheld for only two weeks, depending on how fast the municipality acts,” Gaarekwe noted.

The crackdown extends to unauthorised, irregular, fruitless and wasteful expenditure

Gaarekwe said municipalities had pledged to reduce UIFWE by set percentages between January and June 2026, but many failed to honour commitments.

“So, they had made commitments, and some of them, the reason why the number has reduced to 69 because we have the withheld for 69, is that some did not honour the commitments they made during that time with regards to this unauthorised, irregular, fruitless, and wasteful expenditure.”

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