The FW de Klerk Foundation notes National Treasury’s decision to withhold transfers to non-compliant municipalities and Parliament’s call for their urgent compliance. These developments confirm what has become crystal clear: Many municipalities across South Africa faces a deep and persistent governance crisis.
Provincial departments owed municipalities R14,9 billion by December 2025, placing further pressure on already fragile local government finances. This persistent non-payment undermines service delivery, violates the principles of cooperative government and forces municipalities to finance provincial operations through unpaid accounts. National Treasury should enforce accountability and establish a targeted mechanism to deduct verified municipal debts from provincial allocations.
The FW de Klerk Foundation welcomes the announcement by the Minister of Finance to withdraw the proposed VAT increase and maintain the Value-Added Tax rate at 15% from 1 May 2025.
