DELMAS – Victor Khanye Local Municipality (VKM) is challenging National Treasury's decision to temporarily withhold its July 2026 equitable share allocation, saying it had complied with the required conditions and was surprised to be included among the municipalities affected by the measure.
National Treasury announced on 07 July 2026 that it would temporarily withhold July 2026 equitable share transfers from selected municipalities across South Africa to enforce financial discipline and strengthen accountability in the management of public funds.
Victor Khanye, eMakhazeni and Nkomazi are the three Mpumalanga municipalities affected by the decision.
Treasury said the move followed persistent and serious non-compliance with the Municipal Finance Management Act (MFMA), despite ongoing support, guidance and engagements with the affected municipalities.
According to Treasury, the temporary withholding is aimed at addressing unauthorised, irregular, fruitless and wasteful expenditure while strengthening accountability among municipal officials and political office-bearers.
Treasury said the affected municipalities were notified in writing and given an opportunity to make representations before the decision was implemented.
The South African Local Government Association (SALGA) supported measures to strengthen financial management and accountability but cautioned that withholding equitable share allocations should be balanced against the potential impact on service delivery and municipal financial sustainability.
SALGA said municipalities continue to face challenges, including declining revenue collection, weak local economies, rising bulk electricity and water costs, ageing infrastructure, infrastructure backlogs and increasing poverty.
The association welcomed Treasury's assurance that the temporary withholding is a corrective rather than punitive measure and that equitable share allocations will be released once municipalities meet the required conditions.
However, documents seen by Highveld Chronicle indicate that Victor Khanye Local Municipality believes it had already addressed National Treasury's concerns before the announcement was made.
In correspondence to Finance Minister Enoch Godongwana, the municipality acknowledged owing Rand Water R510.6 million as of 31 March 2026, but said the debt is governed by a debt settlement agreement concluded with Rand Water.
The municipality said it has complied with the repayment agreement, remains up to date with its current monthly bulk water accounts and has not accumulated any new arrears since the agreement came into effect.
VKLM further stated that it submitted the signed repayment agreement, proof of payment and supporting documentation to National Treasury as evidence of compliance.
The municipality appealed to the Minister to reconsider the decision to invoke Section 216(2) of the Constitution, arguing that it had met the requirements communicated by National Treasury and was therefore surprised that its July equitable share allocation had been temporarily withheld.
National Treasury has maintained that the withholding is a corrective, rather than punitive, measure intended to encourage compliance with financial management obligations.
Treasury said equitable share transfers will resume once municipalities satisfy the prescribed conditions and provide proof of compliance. It added that the temporary withholding is not expected to disrupt service delivery.
It remains unclear whether Victor Khanye's submissions were received after Treasury had finalised its decision, whether the submissions were still under consideration when the announcement was made, or whether Treasury and the municipality differ on whether all the prescribed conditions had been met.
Highveld Chronicle sent detailed questions to National Treasury seeking clarity on Victor Khanye's inclusion among the affected municipalities, the status of the municipality's submissions and whether its representations had been considered before the decision was taken.
Treasury acknowledged receipt of the media enquiry but had not responded by the time of publication.
