National Treasury’s warning that it may withhold portions of the Eastern Cape’s equitable share confirms the severity of a payment crisis that now threatens municipal stability and service delivery across the province.
In a letter to Finance MEC Mlungisi Mvoko dated 29 April 2026, National Treasury warned that it is considering action in terms of section 216 of the Constitution due to the failure of provincial departments to pay municipalities for rates and municipal services.
Treasury stated that Eastern Cape provincial departments owed municipalities approximately R1.38 billion as at December 2025, including more than R452 million that had been outstanding for more than one year.
Download letter here.
The Democratic Alliance previously exposed the scale of this crisis through parliamentary questions to Provincial Treasury. In response, Finance MEC Mlungisi Mvoko confirmed that provincial departments owed municipalities more than R1.6 billion for rates and service charges, while admitting that departments had shifted funds intended for municipal services to other priorities.
The MEC further confirmed that municipalities had already resorted to debt collection processes and, in some instances, had begun restricting services to government buildings due to non-payment.
This crisis directly affects the ability of municipalities to maintain roads, stormwater systems, electricity infrastructure, water supply networks, sanitation services, and refuse removal. Communities across the Eastern Cape are already experiencing the consequences through infrastructure failures, sewage spills, water disruptions, and deteriorating public services.
The recent flooding experienced across parts of the province has again highlighted the importance of financially stable municipalities that are capable of maintaining critical infrastructure and responding effectively during disasters.
I have written to Premier Oscar Mabuyane, requesting urgent intervention to ensure that all outstanding municipal debt owed by provincial departments is settled and that departments are prevented from shifting municipal services budgets to other expenditure items.
I have also previously written to the Chairperson of the Standing Committee on Public Accounts (SCOPA) requesting that accounting officers from defaulting departments be summoned to account for their failure to comply with the Public Finance Management Act.
National Treasury has now placed the provincial government on formal notice. The Premier cannot remain silent while provincial departments continue to undermine municipalities that residents rely on for basic services.
The provincial government must provide a credible payment plan, enforce consequence management against non-compliant officials, and ensure that municipalities receive the revenue owed to them.