The financial rules are being rewritten

National Treasury is proposing major changes to South Africa’s public-finance laws, with municipalities and state entities facing closer scrutiny over how they budget, spend and account for public money. Finance Minister Enoch Godongwana set out the proposals in the Medium-Term Budget Policy Statement on 21 October 2026.

The reforms target the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA). The minister described the MFMA proposals as the first comprehensive modernisation in 23 years. Draft amendments have been released for public comment, so the measures are proposals rather than powers already in force.

Municipalities would have to show their budgets are funded

A central proposal is that municipalities demonstrate that their budgets are genuinely funded, rather than adopting plans built on income they are unlikely to collect. Treasury also wants earlier intervention in financially distressed municipalities and stronger processes to investigate misconduct and recover losses.

The objective is to stop chronic unpaid bills, unreliable services and deteriorating infrastructure from being treated as normal operating conditions. It also raises questions about how enforcement will work in municipalities with weak administrative capacity.

Why the reform push is urgent

Godongwana said the government had suspended the next equitable-share transfer to 69 municipalities in July after persistent failures to pay creditors. By the end of July, 37 municipalities had agreed council-approved repayment plans and R4.2 billion had been paid to creditors.

Treasury also announced an additional R21.8 billion for the local-government equitable share over the medium term, intended to cover higher costs of free basic services. More funding and stronger enforcement are being pursued together, but better allocations alone do not guarantee better service delivery.

Procurement rules remain in place

The minister addressed the Constitutional Court’s invalidation of the Public Procurement Act, saying the judgment concerned parliamentary consultation rather than the substance of procurement reform. He emphasised that the existing procurement framework under the PFMA, MFMA and other applicable legislation continues to operate.

For public accountability, the test will be whether revised laws produce credible investigations, recovery of losses and consequences for persistent non-compliance — not simply another layer of reporting. Parliament, Treasury and the public consultation process will determine what eventually becomes law.

Sources and verification

Full 2026 MTBPS speech, IOL, 21 October 2026: Read source ↗

Business Day, 21 October 2026: Read source ↗

GroundUp, municipal transfer suspension background, 9 July 2026: Read source ↗