Treasury withholds July transfers to 60 municipalities after R145bn irregular spending

National Treasury has suspended July 2026 equitable share transfers to 60 municipalities across all nine provinces, citing persistent financial mismanagement and high levels of unauthorised, irregular, fruitless and wasteful expenditure (UIFWE).

Which municipalities are affected

The freeze includes major metros such as Johannesburg, Mangaung and Nelson Mandela Bay, as well as smaller municipalities named in the Treasury statement, including Buffalo City, Beaufort West and Port St Johns. Councils were given written notice and the opportunity to respond before the decision was taken.

Treasury’s reasons and conditions for resuming transfers

Treasury described the intervention as corrective, not punitive, and said transfers will resume only once municipalities demonstrate compliance and provide proof of corrective action. The department said the move is necessary to enforce accountability and address what it called persistent non‑compliance.

“Persistent non‑compliance is a dereliction of fiduciary duties and threatens financial sustainability,”

Treasury said it had offered support through MFMA circulars, training and one‑on‑one engagements, but that many municipalities continue to adopt unfunded budgets, ignore UIFWE obligations, and fail to meet statutory commitments.

Scale of the financial problems

Treasury cited large sums tied to municipal debt and wasteful spending. The statement included:

• R145.21 billion in irregular expenditure, including R40.14 billion in 2024/25 alone.
• R118.13 billion in unauthorised expenditure, more than half on non‑cash budget items.
• R24.12 billion in fruitless expenditure since 2021/22.
• Collective municipal arrears of R3.40 billion in interest owed to Eskom and R1.21 billion to water boards.
• 116 municipalities adopted unfunded budgets in 2024/25.
• 48 municipalities failed to pay third‑party deductions on time.

Audit findings and oversight failures

Treasury said the Auditor‑General’s 2024/25 Consolidated general report on Local Government Audit Outcomes largely corroborates the department’s findings from the 2024/25 MFMA Compliance Report about persistent weaknesses in municipal financial management.

The department also flagged ineffective Municipal Public Accounts Committees (MPACs), saying they are failing to investigate UIFWE cases or enforce consequence management. “Disciplinary boards, recovery steps and criminal referrals are largely absent, further eroding accountability,” Treasury said.

Short‑term impact and Treasury’s message

Treasury insisted the withholding of funds will not affect service delivery in the short term, but warned that UIFWE and irregular spending are undermining governance and threatening sustainability.

“Billions lost to waste and irregular expenditure will no longer be tolerated. Municipalities must prove they can manage public money responsibly before receiving further transfers.”

The department said late payments to statutory bodies and service providers undermine those institutions’ ability to function and that UIFWE reflects weak governance that harms service delivery.