The South African Local Government Association (SALGA) has formally written to the National Treasury regarding concerns about the process followed in withholding the Local Government Equitable Share (LGES) tranche for December 2025. This action has had direct implications for 75 municipalities across the country.

Since September 2025, National Treasury issued two circulars outlining its intention to invoke Section 216 (2) of the Constitution and Section 38 of the Municipal Finance Management Act 56 of 2003. These measures permitted the withdrawal of the LGES, which supports critical municipal functions.

In response, SALGA made multiple attempts to engage with National Treasury to prevent the risk of withholding and to ensure that affected municipalities could comply with legislative requirements before the scheduled payment of the December tranche.

Despite SALGA’s repeated efforts, National Treasury did not provide the necessary co-operation. This hindered SALGA’s ability to help municipalities address compliance issues and avoid the withholding of funds. SALGA continues to emphasise the necessity for municipalities to adhere to all relevant legislation and remains committed to supporting local governments in fulfilling their legislative obligations.

SALGA has identified significant shortcomings in the process undertaken by National Treasury. Notably, there was a lack of consistency in communications with the affected municipalities. Treasury’s correspondence was often unclear regarding the specific information or documentation required to rectify identified non-compliances.

Furthermore, in several cases, deadlines for submission were not adequately communicated, leaving municipalities uncertain about the timeframes for compliance. In instances where municipalities did submit responses to National Treasury, no feedback was provided on the adequacy of their submissions until the actual date of the withholding of the LGES tranche.

SALGA has called on National Treasury to immediately release the LGES tranche for all municipalities that have adequately responded and complied with the requirements.
In addition, SALGA advocates for the establishment of a formal, transparent, and time-bound process within the Division of Revenue Bill (DORA) for the withholding of equitable share allocations. SALGA also recommends that structural engagements be facilitated through Intergovernmental Relations (IGR) platforms to improve coordination and oversight.

The Association urges National Treasury to apply Section 216 (2) and Section 6 (2) (f) of the Public Management Finance Act consistently, not only to municipalities but also to government departments and entities that owe municipalities or are non-compliant with the Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFW) regulations. This approach is essential to uphold fairness and accountability across all spheres of government.

SALGA will continue to liaise with National Treasury to clarify any outstanding requirements for impacted municipalities. The goal is to ensure the timely release of the outstanding Local Government Equitable Share tranche and to safeguard service delivery at the local government level.