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

JB Marks is one of 12 municipalities in North West and one of 69 municipalities nationwide whose Local Government Equitable Share allocations have been withheld.

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

Treasury took the decision 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 Municipal Finance Management Act (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.

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 municipalities to reduce its unauthorised, irregular, fruitless and wasteful expenditure balance by 25% by 30 September 2026, based on its unaudited 2025/26 annual financial statements.

The municipality must also demonstrate progress in dealing with financial misconduct by:

• Submitting investigation reports,
• Providing proof that disciplinary processes have been instituted where required.
• Showing that civil recovery processes have been initiated where applicable
• Supplying criminal case numbers where criminal proceedings have been opened.

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

Treasury also pointed to the latest Auditor-General’s 2024/25 Consolidated General Report supports Treasury’s concerns.

Since the 2021/22 financial year, municipalities have accumulated R145.21 billion in irregular expenditure, R24.12 billion in fruitless and wasteful expenditure and R118.13 billion in unauthorised expenditure. During the 2024/25 financial year alone, municipalities incurred R40.14 billion in irregular expenditure, while 116 municipalities (45%) adopted unfunded budgets.

Municipal debt also remains a growing concern. By the end of the 2024/25 financial year, municipalities owed R3.4 billion in interest to Eskom and R1.21 billion to water boards, while 48 municipalities had overdue third-party deductions for longer than one month.

The JB Marks Municipality owes over R 800 million to Eskom.

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 implemented.