National Treasury says it has taken measures to protect communities from the consequences of municipal failures by releasing the remaining July equitable share allocation.

Previously, the institution withheld funds from 69 municipalities, including Emfuleni Local Municipality, Lesedi Local Municipality, and Sedibeng District Municipality. Treasury said municipalities continued to adopt unfunded budgets, accumulate Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE), and fail to meet statutory obligations to Eskom, water boards, SARS, the Auditor-General, and pension funds.

On July 28, Finance Minister Enoch Godongwana, together with Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa, made the announcement during a media briefing.

Godongwana says, “The decision follows the comprehensive assessment process undertaken, including the active monitoring of compliance by the affected municipalities after National Treasury temporarily withheld transfers in terms of section 216(2) of the Constitution, read with the applicable provisions of the Municipal Finance Management Act, 2003 (MFMA).”

Godongwana cited that the decision to release the remaining transfers does not mean that the affected municipalities have satisfied the requirements of the MFMA, the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings, or the requirements previously communicated in his letters and through a statement by the Treasury.

Godongwana explained that National Treasury is releasing the funds to protect service delivery. He added that the equitable share is an important source of funding for basic services, particularly services provided to poor households.

“National Treasury must therefore balance its constitutional responsibility to enforce financial management requirements with the need to prevent communities from carrying the immediate consequences of failures by municipal institutions and officials,” he said.

The release of funds must accordingly be understood as conditional, intended to protect basic service delivery while requiring affected municipalities to correct the serious weaknesses identified. A structured compliance programme will accompany the release. Municipalities’ progress will be measured by reductions in UIFWE and the implementation of consequence management actions.

The National Treasury will “assess” whether matters have moved through the required investigation, disciplinary, recovery and criminal processes.