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Treasury warns it may again withhold funds from councils

Published

National Treasury says it will keep tight control over municipalities that fail to pay service providers. Director general Duncan Pieterse said Treasury will not ease off on withholding money from councils with poor financial discipline.

Treasury plans tougher rules for municipal finances. These include changes to the Municipal Finance Management Act that give Treasury a say in the appointment of municipal financial officers. They also bring stricter penalties for misconduct and earlier action on financial mismanagement.

Finance Minister Enoch Godongwana withheld the equitable share from 69 municipalities in July. Of these, 38 made payment arrangements with creditors. Municipalities then settled more than R4 billion in bills.

Pieterse said the municipal funding review will give effect to the new white paper on local government. He said Treasury will finalise it by the end of the year. He also said conditional grants have not produced quality spending and will in future be linked to fundable projects.

Other spheres of government owe municipalities R27.6 billion. Treasury will also join wage negotiations to make sure pay increases are affordable.

Key facts

Who
Duncan Pieterse (Director general, National Treasury); Enoch Godongwana (Finance Minister)
What
The National Treasury outlined plans for tougher municipal finance rules, including amendments to the Municipal Finance Management Act giving it a say in appointments of municipal financial officers, stricter misconduct penalties and earlier intervention for financial mismanagement. Director general Duncan Pieterse said the municipal funding review would be finalised by the end of the year.
When
24 October 2026
Where
South Africa
Status
Reported

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