National Treasury defends withholding R13.5 billion from municipalities over financial mismanagement

National Treasury has defended its decision to withhold R13.5 billion in equitable share transfers from 60 municipalities across South Africa, including R3.6 billion from the City of Johannesburg. The intervention, described as corrective rather than punitive, addresses persistent financial mismanagement and high levels of unauthorised, irregular, fruitless, and wasteful expenditure UIFWE. Intergovernmental Relations Deputy Director-General Ogalaletseng Gaarekwe explained that municipalities with unfunded budgets were required to commit to ending this practice and submit signed payment plans for debts owed to creditors like Eskom, water boards, SARS, and pension funds. Withheld funds will be released once municipalities demonstrate compliance and provide proof of corrective action, with Gaarekwe noting that funds could be released within two weeks depending on municipal action. Treasury also stated that municipalities had previously pledged to reduce UIFWE but many failed to honor these commitments. Despite the withholding, Treasury does not anticipate a disruption to service delivery, as municipalities generate most of their funding from their own revenue. Similar actions are being extended to national departments and provinces that fail to pay creditors. The intervention has reportedly prevented two water boards from collapsing and is linked to findings by the Auditor-General regarding unfunded budgets and escalating UIFWE. Treasury emphasized that municipal councils are re