The National Treasury recently announced that it will temporarily withhold Fetakgomo Tubatse Local Municipality’s July 2026 Local Government Equitable Share (LGES) allocation after the municipality failed to comply with financial management legislation.

FTLM is the only municipality in Sekhukhune that is affected by the decision. It is one of five municipalities in Limpopo and one of 69 municipalities nationwide whose LGES allocations have been withheld.

The other affected Limpopo municipalities include Mopani District Municipality and the Musina, Thabazimbi and Modimolle-Mookgophong local municipalities.

According to the National Treasury, the temporary withholding is aimed at improving fiscal discipline, ensuring public money is managed responsibly, and compelling municipalities to address unauthorised, irregular, fruitless and wasteful expenditure.

Treasury took the decision in terms of Section 216(2) of the Constitution and Section 38 of the Municipal Finance Management Act (MFMA), which empowers the National Treasury to withhold transfers from municipalities that repeatedly fail to comply with financial management requirements.

“The decision follows persistent and serious non-compliance with the MFMA and its supporting regulations, despite support provided by the National Treasury through guidance, engagement and formal or informal communication,” Treasury emphasised in a media statement released on July 7.

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Before taking the decision, Treasury said the affected municipalities were notified in writing, urged to improve their financial positions, and given an opportunity to provide reasons why their equitable share allocations should not be withheld.

Treasury has instructed the municipalities to reduce their unauthorised, irregular, fruitless and wasteful expenditure balances by 25% by September 30, 2026, based on their unaudited 2025/26 annual financial statements. The municipalities must also demonstrate progress in dealing with financial misconduct by submitting investigation reports and providing proof that disciplinary processes have been instituted where required.

They must also show that civil recovery processes have been initiated where applicable, as well as supply criminal case numbers where criminal proceedings have been opened.

One of the National Treasury’s biggest concerns is that municipalities continue to adopt unfunded budgets, fail to investigate irregular expenditure properly, and neglect to meet statutory financial obligations.

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National Treasury said equitable share transfers will resume once municipalities have complied with the prescribed conditions and submitted satisfactory proof that the required corrective measures have been been implemented.