The South African Local Government Association (SALGA) has acknowledged National Treasury’s decision to temporarily withhold the July 2026 equitable share allocations from 69 municipalities across the country.
According to Treasury, the move is aimed at enforcing fiscal discipline, addressing financial mismanagement, and ensuring accountability among municipal officials and office-bearers.
Treasury defended its decision, indicating that it was taken following persistent and serious non-compliance with the Municipal Finance Management Act (MFMA) and its supporting regulations, despite repeated support, guidance, and engagements with affected municipalities.
SALGA’s Portfolio Head for Municipal Finance and Fiscal Policy, Lerato Phasha, told YOUFM Newshour that while the association acknowledges measures being taken to promote sound financial management and accountability across all spheres of government, it must be recognised that the local government sector continues to face structural and systemic fiscal challenges requiring urgent support and reform.
“Any withholding of equitable shares must balance compliance objectives with the impact on service delivery and municipal financial sustainability. It is also important to distinguish genuine governance failures from deeper structural challenges,” said Phasha.
She also acknowledged National Treasury’s consideration of SALGA’s submissions to revise down the number of municipalities affected by the fiscal decision.
“National Treasury had initially indicated its intention to withhold equitable share transfers from 99 non-compliant municipalities. The subsequent reduction of municipalities identified for possible withholding to 69 shows the value of proactive engagement and the willingness of municipalities to act when given clear requirements and support,” explained Phasha.
The association highlighted that raising concerns about the decision does not in any way imply condoning non-compliance by affected municipalities. However, SALGA expressed sympathy towards many municipalities, particularly those facing severe fiscal and economic pressures.
SALGA further cautioned that these pressures weaken financial sustainability and service delivery, calling for the underlying challenges to be addressed to resolve recurring financial distress.
The association reiterated its long-standing view that enforcement alone will not “resolve municipal financial distress”, but that sustainable solutions are needed to address municipal debt, unfunded mandates, fiscal imbalances, infrastructure backlogs, and revenue constraints, particularly in rural and economically vulnerable communities.
Phasha, however, said SALGA was encouraged by Treasury’s indication that the withholding process was corrective rather than punitive, and that allocations could be released once the required conditions had been met.
SALGA has committed to continuing its support for affected municipalities by assisting with recovery plans, governance improvements, compliance measures, expenditure controls, and efforts to strengthen financial sustainability.
