The National Treasury has initiated the temporary withholding of July 2026 equitable share transfers to 69 municipalities across South Africa, including 16 in the Free State, as a measure to enforce fiscal discipline and address ongoing financial mismanagement. The central government directive targets councils that have failed to comply with the Municipal Finance Management Act, aiming to curb persistent unauthorised, irregular, fruitless and wasteful expenditure.
Opposition Stance On Financial Intervention
The Economic Freedom Fighters (EFF) have voiced strong opposition to the withholding of funds, arguing that the intervention threatens essential service delivery for residents. The party contends that the solution lies in revising the fundamental assumptions of municipal sustainability and resolving unfunded mandates rather than penalising communities for administrative failures.
However, the solution is not to withhold monies that must deliver services to our people. Municipalities have failed our people, and now the National Treasury is doing the same.
Scope Of Financial Mismanagement
The 16 affected municipalities in the Free State include Mangaung, Letsemeng, Kopanong, Mohokare, Xhariep District, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng, Nketoana, Maluti-a-Phofung, Phumelela, Mantsopa, Ngwathe, and Mafube. According to Auditor-General data, municipalities nationwide incurred R145.21 billion in irregular expenditure since the 2021/22 financial year, with R24.12 billion classified as fruitless and wasteful.
The EFF has called for collaborative action between the Minister of Finance, provincial finance MECs, and municipal management to implement measurable steps that will stabilise local government finances. Further developments are expected as the affected councils seek to rectify their compliance status to secure the release of their withheld equitable share allocations.