The crisis at Ngwathe Local Municipality has deepened, with Parliament set to assess progress following the municipality’s provincial intervention while National Treasury moves to withhold its July 2026 equitable share allocation over ongoing financial failures.

Parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs (CoGTA) conducted an oversight visit to Ngwathe on Wednesday, July 8, to evaluate whether the municipality has made meaningful progress since the Free State Provincial Government intervened under Section 139(1)(c) of the Constitution.

The intervention followed a Bloemfontein High Court ruling, later upheld by the Constitutional Court, which found that Ngwathe had failed to meet its constitutional, legal and administrative obligations to residents.

The courts pointed to widespread governance failures, including debt exceeding R1.5 billion, deteriorating infrastructure that resulted in repeated sewage spills and prolonged water shortages, as well as persistent financial and administrative mismanagement. The intervention ultimately led to the dissolution of the municipal council and the appointment of an administrator.

During Wednesday’s visit, the parliamentary committee engaged political parties represented in council, business organisations, civil society groups, and representatives of women and youth to gather their views on whether the intervention has improved governance and service delivery. Members also met with the Free State Provincial Executive to assess progress made since the court ordered the intervention.

The oversight visit comes as National Treasury confirmed that it is temporarily withholding the municipality’s July 2026 equitable share transfer because of continued non-compliance with the Municipal Finance Management Act (MFMA).

Ngwathe is among 16 municipalities in the Free State affected by the decision, alongside neighbouring Mafube Municipality, where workers have reportedly gone for more than two months without receiving their salaries.

According to National Treasury, the decision is aimed at enforcing fiscal discipline, ensuring that public funds are properly managed, addressing unauthorised, irregular, fruitless and wasteful expenditure, and holding municipal officials and office-bearers accountable where required by law.

Treasury said the action follows persistent and serious non-compliance with the MFMA and its regulations despite repeated support through guidance, engagement and formal communication.

“These municipalities have been given sufficient notice in writing and urged to take measures to change their financial management positions ahead of the withholding of funds. They were also given a platform to send, in writing, reasons why their funds should not be withheld,” Treasury said in a statement.

The department added that many municipalities continue to fail to adopt funded budgets, address unauthorised, irregular, fruitless and wasteful expenditure, and meet their statutory financial obligations.

Treasury said equitable share transfers will resume once the affected municipalities meet the required conditions and provide proof that they have complied.

The developments place renewed pressure on Ngwathe as Parliament evaluates whether the provincial intervention has succeeded in restoring effective governance and improving service delivery for residents.