The Newcastle Local Municipality is set to receive its outstanding July 2026 equitable share after National Treasury confirmed that the remaining funds withheld from affected municipalities will be released from Friday, 31 July 2026.
The decision marks a sudden shift in a dispute that saw Newcastle Municipality approach the High Court on an urgent basis, warning that the continued withholding of the allocation threatened essential services and its ability to meet statutory obligations.
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However, Finance Minister Enoch Godongwana has stressed that the release does not mean Newcastle or the other affected municipalities have met Treasury’s financial management requirements.
Addressing the media on Tuesday, 28 July 2026, Godongwana said the decision followed a compliance assessment conducted under section 216(2) of the Constitution, read with the Municipal Finance Management Act, 2003 (MFMA).
“I wish to make it clear that the decision to release the remaining transfers does not mean that the affected municipalities have satisfied the requirements of the MFMA, the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings, or the requirements previously communicated in my letters addressed to the respective mayors and the press statement released by the department earlier this month.”
According to National Treasury’s announcement, the funds are being released because the withholding period was approaching 30 days and any further delay risked affecting the delivery of basic municipal services.
The equitable share is an unconditional allocation intended to help municipalities perform their constitutional functions and provide basic services, particularly to poor and vulnerable households.
Treasury therefore had to balance its responsibility to enforce financial management requirements against the risk of communities bearing the immediate consequences of failures by municipal institutions and officials.
Godongwana described the decision as a conditional release intended to protect services while requiring affected municipalities to correct the financial and governance weaknesses identified during Treasury’s assessment.
Furthermore, National Treasury initially withheld the July allocations from 69 municipalities across all nine provinces because of what it described as persistent and serious non-compliance with the MFMA and its supporting regulations.
The concerns included unauthorised, irregular, fruitless and wasteful expenditure, commonly referred to as UIFWE; unfunded budgets; failures to meet statutory commitments; weak financial misconduct investigations; and inadequate consequence management.
The affected KwaZulu-Natal municipalities included Newcastle, eMadlangeni, Amajuba District, AbaQulusi, uMzinyathi District, uMkhanyakude District and Impendle.
As of Tuesday, 28 July 2026, 20 of the original 69 municipalities had received their full allocations. A further 21 had received partial payments, while 28 had received none.
Treasury’s assessment reportedly exposed broader weaknesses extending beyond individual cases of irregular expenditure. These included concerns over budgeting, cash-flow management, revenue collection, creditor obligations, bulk-service costs, employee expenditure and existing financial commitments.
Godongwana further indicated that municipal councils, Municipal Public Accounts Committees, accounting officers and senior officials had, in numerous cases, failed to fulfil their statutory responsibilities adequately.
The identified shortcomings included delayed UIFWE investigations, incomplete supporting evidence, stalled disciplinary processes and inconsistent or absent consequence management.
Treasury has consequently indicated that its scrutiny will extend beyond those responsible for the original expenditure to include officials and structures responsible for investigating the matters and taking corrective action.
As previously reported by Newcastillian News, Newcastle and eMadlangeni municipalities were expected to receive partial payments during the week beginning Monday, 20 July 2026. The remaining balances were to be released once the municipalities provided proof that Treasury’s conditions had been met.
However, Newcastle Municipality subsequently stated that the anticipated payment had not materialised and confirmed that it had approached the High Court urgently over National Treasury’s failure to disburse the allocation in line with the Division of Revenue Act.
Explaining the importance of the funding, the Municipality stated:
“The equitable share constitutes a constitutionally entrenched unconditional grant allocated to municipalities to enable the provision of basic services and to subsidise the cost of free basic services to indigent households. It further supports the operational and institutional capacity of municipalities to fulfil their developmental mandate.”
Furthermore, the Municipality argued that the continued withholding of the funds undermined its ability to provide essential services, meet statutory obligations and sustain programmes intended to improve residents’ quality of life.
“It is further noted that 69 municipalities across the country are similarly impacted by the non-payment of their equitable share allocations by National Treasury,” the Municipality stated, adding that a comprehensive update would be provided following the outcome of the court proceedings.
No outcome in Newcastle Municipality’s urgent High Court application had been publicly announced at the time of publication. It also remains unclear whether the Municipality will continue with the application following Treasury’s decision to release the outstanding funds.
While the July funds will now be released, Treasury’s intervention has not ended.
Premiers and provincial MECs responsible for Finance and Cooperative Governance and Traditional Affairs will receive formal correspondence setting out the conditions that could influence the withholding of the next equitable share instalment in December 2026.
A structured compliance programme will also accompany the release, with affected municipalities required to provide quarterly reports and supporting evidence of corrective action.
The first formal reporting deadline is 30 September 2026.
By 31 October 2026, municipalities must demonstrate progress in processing matters that remained outstanding on 30 June 2026 through the required legal procedures.
By 30 November 2026, Treasury expects clear evidence that more of these matters have progressed through UIFWE reduction, disciplinary and accountability processes to conclusion.
Municipal progress will not be measured solely by reductions in UIFWE balances. Treasury will also assess whether investigations, disciplinary action, financial recovery and criminal referrals are being pursued where required.
“National Treasury recognises that communities should not carry the immediate consequences of failures by municipal institutions. That consideration is central to the decision to release the remaining July 2026 transfers,” Godongwana said.
For Newcastle Municipality, the release should ease the immediate financial pressure raised in its High Court application. It does not, however, amount to a finding that the Municipality is compliant.
Attention will now turn to whether Newcastle meets the reporting and corrective-action requirements ahead of the December 2026 allocation, and what becomes of the Municipality’s pending legal proceedings against National Treasury.
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