JOHANNESBURG - Finance Minister Enoch Godongwana said municipalities are deducting more than R1.7 billion from workers' salaries, but the money never reaches their pension funds.
This is one of the key reasons Treasury has withheld funding from 69 municipalities.
Godongwana said government wants accountability but also aims to help struggling municipalities improve.
"It is this kind of behaviour that we're trying to settle and deal with. We are not only interested in punishing, but we're also interested in supporting municipalities," Godongwana said.
Treasury announced the withdrawal earlier this week after revealing that 69 municipalities were failing to adhere to financial management rules.
They include the metros of Johannesburg, Buffalo City, Nelson Mandela Bay and Mangaung.
READ | Treasury insists municipal funding freeze will not impact services
Treasury painted a grim picture of municipal finances.
According to Godongwana, from 2021 to 2022, municipalities incurred R24.12 billion in fruitless and wasteful expenditure.
He said they have also accumulated R145.21 billion in irregular expenditure, with R40.14 billion in 2024/25 alone.
Additionally, there was also R118.13 billion in unauthorised expenditure.
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This, according to Godongwana, threatens the financial sustainability of bulk suppliers, undermines statutory bodies, and disrupts service delivery.
" Non-payment of service providers results in penalties, interest charges, and service interruptions. Weak governance and failure to process UIFWE (Unauthorised, Irregular, Fruitless and Wasteful Expenditure) through Municipal Public Accounts Committees erode accountability and public trust," he said.
Treasury said the money will be released once municipalities settle outstanding financial obligations and submit acceptable payment plans.