In Budget Vote 8 speaker notes, South Africa's National Treasury said it is reviewing the fiscal and economic baseline ahead of the Medium Term Budget Policy Statement (MTBPS) and set out a reform agenda focused on stronger public finance rules, tighter local government oversight and infrastructure delivery. It also said funds will be deducted from national and provincial departments to settle outstanding municipal debts, while the review of the Public Finance Management Act (PFMA) and Municipal Finance Management Act (MFMA) is at an advanced stage after stakeholder consultations. The Treasury linked the baseline review to a more difficult global environment, citing the Middle East conflict, higher fuel, fertiliser and shipping costs, and inflation at 4 per cent. A temporary reduction in the general fuel levy over the last three months cost the fiscus about ZAR 17.2bn. On municipal finances, provincial debt to municipalities has exceeded ZAR 14bn, with about ZAR 14.9bn owed by provincial departments and ZAR 8.2bn by national departments. Continued use of section 216(2) of the Constitution is planned where municipalities fail to adopt funded budgets or breach financial management legislation. Any necessary fiscal adjustments are to be made through the MTBPS process. The wider legislative and operational pipeline includes proposed PFMA and MFMA amendments to strengthen governance, transparency, enforcement and consequence management, amendments to the Auditing Profession Act, Public Procurement Act regulations to be tabled before Parliament, continued work on the Conduct of Financial Institutions Bill under the Twin Peaks framework, local government funding and water infrastructure reforms, and ZAR 41bn for health infrastructure over the medium term.
National Treasury (South Africa)2026-05-22
South Africa National Treasury announces deductions from departmental budgets to settle about ZAR 23.1bn owed to municipalities
South Africa’s National Treasury is reviewing the fiscal and economic baseline ahead of the Medium Term Budget Policy Statement and reforms to strengthen public finance rules, local government oversight and infrastructure delivery, including advanced reviews of the Public Finance Management Act and Municipal Finance Management Act. Treasury will deduct funds from national and provincial departments to settle municipal debts, continue using section 216(2) of the Constitution where municipalities breach financial management requirements, and pursue broader legislation on public finance, auditing, procurement, financial sector conduct and infrastructure funding.