BUDGET 2026/27: LOCAL GOVERNMENT FINANCIAL MANAGEMENT CLAMPDOWN

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BUDGET 2026/27: LOCAL GOVERNMENT FINANCIAL MANAGEMENT CLAMPDOWN

• 25 February 2026
• National Treasury
• SA Legal Academy

Please note: Traditionally, each year – in anticipation of parliamentary hearings – the National Assembly and NCOP Finance Committees call for written submissions on framework and revenue proposals tabled with the Budget. The joint notice concerned is usually published well before those proposals become available. Please scroll down to the bottom of this report for information on this year’s notice.

Finance Minister Enoch Godongwana’s 2026/27 Budget speech included several important announcements with positive implications for service delivery at local government level.

Key among them was a commitment to ensuring that ‘municipalities …return to the foundational principle of fiscal integrity’ and that ‘revenue collected for a specified function must first sustain that function before any cross-subsidisation can occur’. In that context, the Minister referred to National Treasury’s intention to ‘revitalise support for (the) development of long-term financial plans’ to:

• ‘improve project identification’
• facilitate sustainable cash flows, and
• ensure that financial decisions are appropriately informed.

He expects this to ‘negate the challenge of unfunded mandates’ and to address limited capacity for infrastructure maintenance and sustained services.

In addition:

• the final public-private-partnership regulations for municipalities are expected to be ‘published by 30 June 2026’, while
• programme-specific grant allocations will be reduced where ‘value, efficiency and accountability’ are found wanting.

On broader financial sector matters, the Minister’s speech referred to:

• the imminent release of draft regulations under the 1933 Currency & Exchanges Act making crypto assets part of South Africa’s ‘capital flow management regime’ governed:
  • according to cross-border capital movement requirements, and
  • in keeping with regulations already in place to prevent the use of crypto assets for money laundering and fraud, as well as
• eased restrictions on cross-border capital flows (making it possible for foreign assets to be managed domestically with the aim of improving South Africa’s competitiveness in that industry).

Reassuring South Africans that government spending will remain ‘highly redistributive’, the Minister announced increases in a raft of grants and interventions related to the social wage.

In line with a commitment in President Cyril Ramaphosa’s recent State of the Nation Address (SONA), he also drew attention to increased spending on:

• ‘peace and security’
• defence
• the judiciary (to improve ‘capacity’), and
• ‘specialised courts’.

Noting that South Africa’s ‘improving fiscal position allows (National Treasury) enough room to withdraw the proposed tax increases without putting fiscal sustainability or economic activity at risk’, the Minister referred to proposals for:

• ‘additional tax measures to ease the financial burden on households and businesses’ by:
  • ‘adjusting personal income tax brackets and rebates fully in line with inflation’, and
  • increase the compulsory VAT registration threshold, as well to
• encourage saving by increasing:
  • the tax-free annual investment limit, and
  • the limit to retirement fund deductions.

Against that backdrop, the National Assembly’s Standing and NCOP’s Select Committees on Finance have issued a joint notice calling for written submissions by 2 March 2026 on fiscal framework and revenue proposals tabled with the Budget. Parliamentary hearings are scheduled to take place two days later.

Please click the links below for more information:

• speech
• Division of Revenue Bill
• Appropriation Bill
• Special Appropriation Bill
• joint committee notice
• Budget documents
• SONA 2026

Published by SA Legal Academy Policy Watch

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