South Africa’s National Treasury declared it would temporarily withhold funding to 69 municipalities to force them to fix their problems, which include unfunded budgets, irregular and wasteful expenditure, and failure to repay money owed to Eskom, water boards, the revenue service, the Auditor-General, and pension funds. When these entities are not paid for the electricity, water and services supplied, it threatens service delivery and the operation of these entities.

So how bad is the situation? At the end of December 2025, municipalities said they owed creditors R161-billion. This is a self-reported figure from municipalities themselves; separate figures reported directly by creditors paint a similarly grim picture. Eskom said it was owed R110.5-billion. Mpumalanga has the highest amount owed to Eskom at R30.5-billion, followed by the Free State at R29.1-billion. Water boards, which supply municipalities with water, are owed a combined R21-billion.

Municipalities won't have to repay all the money they owe, but they will need to demonstrate that their budgets are funded and that they're addressing irregular spending. Of the 69 municipalities on the list, 39 had issues with unauthorised, irregular, fruitless or wasteful expenditure, and 12 had unfunded budgets. Treasury has also set a target of cutting irregular expenditure by 15% by August, and another 15% by September, before funding is reinstated.