Treasury offers lifeline to 49 municipalities amid service delivery concerns

Forty-nine embattled municipalities have been handed a financial lifeline after the National Treasury agreed to conditionally release their July 2026 equitable share allocations, easing fears of widespread disruptions to basic service delivery.

Finance Ministe, Enoch Godongwana, announced on Tuesday that the decision was taken to protect communities from the immediate impact of municipal financial failures, while putting pressure on municipalities to address ongoing governance and financial challenges. 

“National Treasury must balance its constitutional responsibility to enforce financial management requirements with the need to avoid communities carrying the immediate consequences of failing municipalities. This is a conditional release intended to protect basic service delivery while requiring affected municipalities to correct the serious issues,” Godongwana said.

The move follows Treasury’s decision earlier this month to withhold funding from 69 municipalities over irregular, unauthorised, fruitless and wasteful expenditure, as well as billions of rand owed to Eskom, water boards, SARS and pension funds.

Godongwana revealed that 28 municipalities would receive their equitable share allocations for the first time on Friday, while 21 municipalities had already received partial funding by Tuesday. 

Despite the relief, the minister warned that municipalities would be strictly monitored and could have their next allocation withheld if they fail to improve.

“They are not off the hook. Each municipality will receive a letter outlining the conditions attached to the release of the funds. We will also send similar letters to the MECs of Local Government and Finance in each province and the premier of that province to work with them to ensure that, by the next tranche, there will be no need to withhold the equitable share,” he said.

The municipal equitable share is paid in three instalments each financial year – in July, December and March. It is intended to help municipalities fulfil their constitutional obligations by funding essential services, particularly for poor and vulnerable communities.

Minister of Cooperative Governance and Traditional Affairs (COGTA), Velenkosini Hlabisa, said government would work closely with the affected municipalities to recover money owed to them by various departments and ensure they meet Treasury’s conditions before the next allocation.

“A similar stance that has been taken to our municipalities will have to be taken against the government departments and provincial governments who owe money to our municipalities. We are going to work together to ensure that we provide support where it is necessary. Because the truth is, we are at the tail end of the term of these councils, and we should not allow a situation that will collapse them before the 4th of November,” said Hlabisa.

Full statement on https://t.co/XHgSdKR4Wo pic.twitter.com/Aw3R8bJI6e

— National Treasury RSA (@Treasury_RSA) July 28, 2026

Treasury said communities should not bear the immediate consequences of failures by municipal institutions. The release is therefore conditional, not an endorsement of municipal performance.

— NationalCoGTA 🇿🇦 (@NationalCoGTA) July 28, 2026