October 22, 16:00IOL

Finance Minister warns municipalities about potential funding cuts due to inefficient management

Finance Minister Enoch Godongwana stated that the full responsibility for the effective use of public resources and meeting the needs of the population lies with the municipalities. Presenting the Medium-Term Budget Policy Statement for 2026, Godongwana addressed members of parliament, noting that while citizens interact most directly with the state at the local level, the financial and operational performance of many municipalities remains weak.

He emphasized that such a situation is unacceptable because it negatively affects the provision of basic services, undermines economic activity, and reduces public trust. Godongwana also noted that increased funding has somewhat helped alleviate fiscal pressure on municipalities.

Municipal grants may be suspended or redistributed

The Minister stated that the focus must now shift to achieved results rather than just resource availability. The main objective is to improve financial management, strengthen the administrative apparatus, and eliminate losses. He specified that every rand transferred to municipalities must lead to tangible improvements in people's daily lives, including reliable water supply, functioning sanitation, proper roads, and safe, lit public spaces.

Godongwana also reported that municipalities are being incentivized to reinvest revenue from water, electricity, and waste disposal services into infrastructure supporting these services. The Minister demanded that municipalities manage the tariffs they set for residents for basic services more competently. According to a municipal finance review conducted by the ministry, most municipalities have sufficient funds for current operations, but excessive operating costs lead to insufficient long-term investment in infrastructure and its maintenance.

Measures such as the use of smart meters are being implemented to improve revenue collection. In addition to the allocated 2 billion rand, another 3 billion rand is planned to be added within the medium-term expenditure framework for wider deployment of smart meters. This is in response to successful revenue collection experiences in local municipalities such as Sol Plaatje, Kannaland, and Bela Bela. Godongwana warned that he would not hesitate to withhold Equitable Share allocations from municipalities that violate their obligations. In June, the National Treasury suspended payments to 69 municipalities before releasing funds to those that met specific requirements.

He added that in the medium term, grant conditions will be strictly enforced, and funds will be withheld or redistributed if municipalities fail to comply with requirements, and allocations will be more closely tied to service delivery outcomes.

Treasury proposes tightening municipal finance rules

Godongwana also announced that the government is intervening to ensure that national departments, provinces, and other agencies pay debts owed to municipalities after verifying the amounts. As of December 31, 2025, municipalities reported that government bodies owe local government 27.6 billion rand, with provincial departments owing more than half of this amount.

Meanwhile, the National Treasury is in the process of amending the Municipal Finance Management Act (MFMA). Godongwana informed Parliament that the draft legislation, published for comment, clarifies the duties of accountants, councils, and executive bodies. This document strengthens the National Treasury's ability to act against financial misconduct and persistent non-compliance while protecting accountants who make lawful decisions in good faith. Furthermore, it strengthens the governance of financially burdened state structures.

The bill aims at unfunded budgets and misconduct

The proposed changes allow for decisive early intervention in accordance with Section 139 of the Constitution, enhance oversight of financial management by the National Treasury, and stipulate personal liability for officials, political leaders, and council members for unauthorized, irregular, fruitless, and wasteful expenditure. These measures prevent councils from adopting unfunded budgets and create provisions for more accurate budget estimates.

CEO Duncan Peters noted that a central element of the amendments is the involvement of the National Treasury in appointing Chief Financial Officers (CFOs) in municipalities. He also stated that the bill is currently in the public comment phase.

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iol.co.zaOctober 21, 07:00

Finance Minister Godongwana under pressure over fuel costs and government spending

Finance Minister Enoch Godongwana is facing increasing pressure amid the presentation of the Medium-Term Budget Policy Statement (MTBPS), as he is expected to take steps to cut spending and propose solutions to combat rising fuel prices.

Godongwana must present plans for public expenditure, revenue forecasts, and public financial management for the next three years. However, the Cosatu union stated that workers are in a difficult position due to youth unemployment at 48% and economic growth of only 1.2%. Parliamentary Coordinator Matthew Parks emphasized that today's MTBPS cannot be routine.

Parks stated: 'The government must demonstrate a decisive shift to stimulate growth, restore public and municipal services, assist workers and the poor, and instill hope in the nation. It is time to stop proven and unsuccessful neoliberal austerity policies that have undermined growth. Now we must invest to develop the economy and solve the unemployment problem.'

DA prioritizes debt reduction and accountability

DA's finance representative Kingsley Wakelin noted that today's MTBPS will show how seriously the government is committed to fixing public finances. He insisted on the need to improve spending, accelerate reforms, and increase accountability.

Wakelin stated that the government must stabilize debt, spend money on necessary things, and accelerate reforms. He added: 'The government must fulfill its obligations to stabilize debt and increase the primary surplus. This year, South Africa will spend R432.4 billion servicing its debt. This is money that could go to schools, clinics, police, and roads.'

Wakelin also reported that tax collection is expected to exceed February estimates. He stressed: 'This money should not be locked up in new recurrent expenditures. Debt must be paid down and growth supported first.'

Parties demand fuel price relief and anti-smuggling measures

ActionSA MP Alan Bisley stated that his party expects Godongwana to develop immediate assistance for South Africans facing rising fuel prices and the cost of living. Bisley noted that the government must act, recognizing that rising fuel prices lead to increased food prices, basic goods, services, and virtually the entire transport-dependent economy.

He also pointed out that given strong SARS revenue collection above targets, largely due to expanded capabilities, the government has a strong opportunity to provide significant relief through fuel levies without compromising fiscal targets. Bisley called on Godongwana to tackle the illegal economy.

Bisley demanded that the minister announce a three-year moratorium on increasing excise duties on these goods above the inflation rate to provide greater certainty for legitimate businesses, protect jobs, and help curb the growth of the dangerous black market. He also noted that combating the illegal economy would expand the tax base by moving economic activity into the formal sector and recovering revenue lost to the treasury.

Bisley concluded that combining fuel levy relief with decisive action against illegal trade would mitigate the cost of living crisis, strengthen revenue collection, and support economic growth. He added that support for ActionSA's corrective budget would depend entirely on the willingness of the National Unity Government to provide urgent aid to needy South Africans and take action against the illegal economy. 'We cannot support a budget that requires South Africans to bear most of the burden while the government fails to address the fundamental issues constraining our economy.'

Build One South Africa MP Nobuntu Khlazo-Webster proposed that Godongwana cut the VIP budget by 20% and redirect those funds to strengthening local police forces. Khlazo-Webster stated that the MTBPS is an opportunity to strengthen parliamentary power to block wasteful expenditure before it occurs.