FISCAL RECKONING: Treasury Freezes R13.5-Billion – 69 Municipalities Placed on Notice
Image Source: Africa Daily
National Treasury has withheld the July equitable share transfers to 69 of South Africa’s 257 municipalities, suspending a combined R13.5-billion in funding as a direct consequence of persistent financial mismanagement. The intervention, announced on Tuesday and elaborated upon at a media briefing in Pretoria on Wednesday, targets municipalities found to be in chronic non-compliance with the Municipal Finance Management Act.
Treasury’s deputy director-general Ogalaletseng Gaarekwe stated that the freeze is “corrective, not punitive” – meaning municipalities can unlock the funds by submitting creditor-backed payment plans and meeting specified reporting requirements. Officials say service delivery need not be disrupted, as the equitable share represents only one portion of municipal revenue, with the majority derived from rates and service charges. Gaarekwe noted that a similar intervention last year saw all 75 affected municipalities ultimately release their funds by early August after taking the required corrective steps.
The scale of the crisis underlying the decision is significant. Treasury disclosed that since the 2021/22 financial year, municipalities have incurred more than R24-billion in fruitless and wasteful expenditure, over R145-billion in irregular expenditure, and more than R118-billion in unauthorised expenditure. By the end of 2024/25, municipalities owed R3.4-billion in interest to Eskom and R1.2-billion to water boards. Among the municipalities affected are Buffalo City Metropolitan (KuGompo), Nelson Mandela Bay, the City of Johannesburg, and Mangaung. The Democratic Alliance-aligned BOSA has warned that withholding Johannesburg’s funding – a city that generates nearly 16% of South Africa’s GDP – carries far-reaching national economic implications.
Key facts:
– R13.5-billion in July equitable share transfers withheld from 69 municipalities across all nine provinces (African Insider / GroundUp)
– Originally 99 municipalities were notified; 30 took corrective action before the freeze took effect (African Insider)
– Municipalities owed R3.4-billion to Eskom and R1.2-billion to water boards as at the 2024/25 year-end (African Insider / GroundUp)
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