Treasury blocks 69 municipalities' funding as creditors go unpaid
Equitable share transfers were withheld from councils that failed to pay Eskom, SARS, the Auditor-General and pension funds, and 38 have since paid back at least R4.2-billion.
National Treasury has withheld equitable share transfers from 69 municipalities that failed to pay their creditors and mismanaged public funds, and says it will keep enforcing compliance and accountability measures against councils that do not meet their financial obligations.
The failures listed in the Medium-Term Budget Policy Statement include non-payment of bulk utility providers, the South African Revenue Service, the Auditor-General of South Africa and pension fund contributions. Sunday World reported on the Treasury position on 21 October under the heading that Treasury was keeping pressure on municipalities over unpaid bills, and the facts below stand on the MTBPS itself.
Finance Minister Enoch Godongwana said the current financial year should bring a visible reduction in unauthorised, irregular, fruitless and wasteful expenditure as government tightens its oversight of municipal finances. The MTBPS states: “The failures by the municipalities included non-payment of bulk utility providers, the South African Revenue Service and the Auditor General of South Africa, as well as of pension fund contributions.”
Government required the affected municipalities to negotiate payment plans with their creditors and to take disciplinary action against those responsible for unauthorised, irregular, fruitless and wasteful expenditure.
The pressure has moved some money. At least R4.2-billion had been paid to creditors by the end of July by 38 municipalities, according to the MTBPS.
For residents, the equitable share is the part of the national revenue that flows to councils to help fund the services they deliver, and a council that cannot pay Eskom, SARS or its pension fund is a council whose ability to keep the lights on, pay its staff and fund its network is already under strain. A council that cannot pay the Auditor-General is also a council whose own books are being questioned.
The squeeze runs both ways. Municipalities reported that public bodies owed them R27.6-billion as at 31 December 2025, more than half of it owed by provincial government departments. Treasury said government was working on interventions to make sure municipalities receive money owed to them by other public institutions.
One of those measures is the municipal debt-relief programme, which aims to stop municipalities from building up unpaid electricity bills with Eskom. The programme attaches conditions: municipalities must improve financial management and ensure that electricity revenue goes to meeting their obligations. Councils that cannot run their electricity distribution networks sustainably are expected to enter into distribution agency agreements with Eskom, under which Eskom takes over the operational management, maintenance and billing of electricity distribution on the municipality’s behalf.
The intent is to protect municipal revenue by ring-fencing electricity collections to pay bulk electricity bills and fund network maintenance, with any surplus returned to the municipal budget.
The enforcement signals that councils will be expected to show tangible improvements in financial management rather than let unpaid bills and irregular expenditure accumulate.
