Treasury moves to vet every municipal CFO as R484.5 billion goes uncollected
Proposed changes to the Municipal Finance Management Act would let National Treasury into the appointment of municipal chief financial officers, as consumer debt owed to councils climbs by R56.8 billion in a year.
National Treasury wants a seat at the table when municipalities appoint their chief financial officers, one of a set of proposed amendments to the Municipal Finance Management Act set out in the 2026 Medium Term Budget Policy Statement tabled by Finance Minister Enoch Godongwana.
As Sunday World reported on 21 October, the proposal would broaden Treasury’s powers over municipal financial systems and controls to include involvement in CFO appointments. The Enquirer reports the substance of that package here, because the numbers behind it are the part South Africans will feel.
Consumer debt owed to municipalities rose from R427.7 billion in June 2025 to R484.5 billion in June 2026, an increase of R56.8 billion in twelve months. Over the same period, what municipalities owe their creditors rose from R156.1 billion to R185.2 billion. Councils collected 63.9% of the revenue they billed. Of the money owed to municipal creditors, R99.9 billion sits in bulk electricity accounts.
The MTBPS states that these pressures are constraining municipalities’ ability to provide basic services and meet their obligations to creditors. It also flags a wider fiscal risk: institutions that depend on municipal payments, Eskom and the water boards among them, carry the shortfall when councils do not pay.
That is the load a household sees as a dark street, a dry tap or a bill that keeps rising while the service does not arrive.
The proposed MFMA amendments go beyond the CFO question. Treasury wants earlier and stronger interventions under Section 139 of the Constitution, the provision that allows a province or the national government to step into a municipality that cannot meet its obligations. The stated aim is to act before a council reaches financial distress rather than after it.
The package also targets budgeting practice. Treasury proposes measures to prevent councils from adopting unfunded budgets and to improve the credibility of municipal budgeting, a response to budgets that balance on paper by assuming revenue that never arrives.
On misconduct, the MTBPS proposes that officials, political office bearers and board directors be held personally liable for unauthorised, irregular, fruitless and wasteful expenditure. The stated purpose is to strengthen accountability and deter the poor financial practice the document says continues to affect many municipalities.
The amendments are designed to complement broader changes to the Public Finance Management Act aimed at governance and accountability across the public sector.
The budget statement marks a shift from oversight towards active intervention. In June 2026, the Minister of Finance suspended equitable share transfers to 69 municipalities over continued failures to pay creditors, including bulk utility providers, the South African Revenue Service, the Auditor-General of South Africa and pension funds.
By the end of July, 38 municipalities had concluded formal repayment plans, and R4.2 billion had been paid towards outstanding debt. Government has said the intervention can be repeated if municipalities fail to honour their commitments.
What a reader should watch is the appointment question. A CFO signs off the financial statements, controls the payment run and is the officer a council relies on to know whether the budget is real. Treasury involvement in that appointment would move a decision that has sat with councils and their accounting officers, and it would put national government’s judgement inside a municipal appointment for the first time in this form. The amendments are proposals in a budget policy statement, not law, and they would have to pass through the legislative process before any of this takes effect.
