LEGISLATIVE BACKGROUND
At the end of every month, Accounting Officers of municipalities submit financial statements to the Gauteng Provincial Treasury detailing their state of municipal budgets as required by Section 71.1 of the Municipal Finance Management Act, No.56 of 2003 (MFMA).
Furthermore, on a quarterly basis, the Gauteng Provincial Treasury compiles a consolidated statement on the state of municipal budgets and submits the document to the Gauteng Provincial Legislature in compliance with Section 71.7 of the MFMA.
Therefore, today we are publishing the consolidated quarterly state of municipal finance report covering the first half of the 2025/26 financial year which ended on 31 December 2025. We are doing this in a conscious effort to inform the public about the financial performance of municipalities in our province and how this impact on service delivery to communities.
STATEMENT ON THE OPERATING REVENUE AND EXPENDITURE
At the start of the current municipal financial year on 01 July 2025, Gauteng municipalities adopted a consolidated budget of R229.1 billion for operating revenue and R222.2 billion for operating expenses, resulting in an overall budgeted operating surplus of R6.9 billion.
The total operational revenue generated by Gauteng municipalities as of 31 December 2025, was R123.3 billion, or 53.9% of the annual budget and 3.9% more than the 50% straight line estimate. The metropolitan municipalities were the primary contributors (City of Ekurhuleni – R34.5 billion; City of Johannesburg – R48.5 billion and City of Tshwane – R27.6 billion).
The operating expenditure incurred during this period amounted to R109.2 billion, representing 49.2% of the annual budget. The main contributors being the metropolitan municipalities.
As a result, most Gauteng municipalities have generally been functioning within the adopted budget during the first half of this financial year. However, the City of Johannesburg, Lesedi Local Municipality, Merafong City Local Municipality and Rand West City Local Municipality reported accumulated operating deficits during this period.
The collection rate for majority of the Gauteng municipalities as at the end of December 2025 was R30.1 billion, or 116%, which is higher than the 95% expected standard (as per MFMA Circular 71). However, the collection rates for City of Johannesburg, Emfuleni Local Municipality, Lesedi Local Municipality and Merafong Local Municipality were below the expected norm of 95%
STATEMENT ON CAPITAL EXPENDITURE
Gauteng municipalities have approved an aggregated capital expenditure budget of R16.2 billion for the 2025/26 financial year, reflecting an increase from the previous year’s budget of R14.9 billion. This represents a growth of nearly R1.3 billion, or approximately 8%, in allocations dedicated to infrastructure development. The capital budget is supported primarily by conditional grants allocated through the Division of Revenue Act No.24 of 2024 (DoRA), that represent National Grants of 55% (R 8,9 billion), Provincial Allocations accounting for 8% (R1.4 billion), borrowings for infrastructure development 22% (R3.5 billion), and capital projects that are funded by internally generated funds representing 15% (R2.4 billion).
As of 31 December 2025, Gauteng municipalities reported a total expenditure of R5.4 billion, accounting for 34% of the annual budget. Although aggregate expenditure remains below the 50% threshold at this stage except for Rand West City LM at 68%, historical trends indicate that municipalities are likely to achieve at least 85% of budgeted spending by the end of the financial year.
The following is the performance of individual Grants as of the 31 December 2025.
- Municipal Infrastructure Grant (62%) – All the Municipalities have spent above the required 40%. Notable Lesedi is at 89%.
- Integrated Urban Development Grant (52%) – Mogale City is the only recipient of the grant, reporting 52% as of 31 December 2025.
- Water Services Infrastructure Grant (46%) – WSIG average spending is 46%. Mogale City is the highest-performing municipality with an average spending of 59% and such a level of expenditure, is highly commendable, whilst Merafong and Lesedi performed below the required 40% at 39% and 32% respectively.
- Urban Settlements Development Grant (23%) – USDG average spending is 23%, which is a grant for Metropolitan municipalities. This low spending will likely affect service delivery negatively if acceleration plans on capex spending are not developed and implemented.
- Neighborhood Development Partnership Grant (34%) – Overall expenditure as of 31 December 2025 is reported at an average of 34%. The spending is concerning and low.
- Integrated Electrification Programme Grant (59%) – The aggregated expenditure is satisfactory, and the municipalities are likely to spend their entire allocation by 30 June 2026.
- Public Transport Network Grant (21%) – The reported average spending is 21%. PTNG is one of the largest capital grants received by Metros, yet it is one of the worst-performing grants. All the recipients of this grant are not performing well as no municipality managed to spend above 40%. There is high possibility that the allocation will be reduced as per requirements of Division of Revenue section 17 and 18.
The National Treasury has issued Circular 130 which was developed in collaboration with Provincial Treasuries and is in line with the requirements of MFMA. This circular confronts the significant infrastructure challenges that the country and provinces are currently facing, particularly the issue of ageing infrastructure.
Municipalities must immediately prioritize the renewal of existing infrastructure assets in their adjusted budgets for the 2025/26 fiscal year. Specifically, they are mandated to allocate 60% of their capital budget to the renewal of these assets and 40% to new infrastructure projects. Moreover, the circular underscores the vital necessity of repairs and maintenance for infrastructure assets. Municipalities are required to budget at least 8% of their total infrastructure assets value for repairs and maintenance, ensuring that service delivery remains uninterrupted and effective for the communities in Gauteng.
In addition, the Gauteng Provincial Treasury has issued a practice note regarding this matter in order to facilitate effective pre-planning for infrastructure development and to ensure that all required activities are undertaken so the municipalities can optimise the use of allocated funds.
In strengthening municipal financial management across Gauteng, we will intensify targeted support to municipalities through a strategic and developmental supply chain management approach. This support will focus on improving procurement planning, accelerating capital expenditure and infrastructure delivery, and reducing unauthorised, irregular, fruitless and wasteful expenditure through strengthened preventative controls. These measures will enhance governance, promote ethical procurement, and ensure that municipal resources are utilised efficiently and transparently to improve service delivery outcomes.
OUTSTANDING DEBTORS AS AT 31 DECEMBER 2025
As at 31 December 2025, Gauteng municipalities reported an aggregate debtor’s balance of R165.7 billion. A significant portion of the total debtor balance is related to households at 73.3%, commercial at 23.2% and state organs at 3%. Gauteng municipalities are having difficulty putting credit control policies into practice, which leads to a poor collection rate and, ultimately, an inability to pay off debts when they become due.
ORGANS OF STATE – DEBTORS BALANCE AS AT 31 DECEMBER 2025
The Gauteng Provincial Government’s (GPG) outstanding debt to municipalities amounted to R2 billion as at the end of December 2025 following payments of R101.7 million against a total billed amount of R2.19 billion. The debt profile is largely concentrated within the three metropolitan municipalities, the City of Johannesburg, City of Tshwane, and City of Ekurhuleni, which together account for the majority of the outstanding balance.
The main drivers of the provincial debt are the Departments of Infrastructure Development accounting for 51% of the Debt, followed by Education at 33%, and Health at 12%. While progress has been made through targeted payments, the current debt levels remain significant and require sustained intervention.
In collaboration with the Gauteng Department of Co-operative Governance and Traditional Affairs, we continue to engage municipalities through structured intergovernmental platforms, including the Debt Management Committee (DMC) to verify accounts, resolve historical discrepancies, and implement payment plans aligned to available cash flows. Priority is being given to stabilising municipal finances, preventing service disruptions, and strengthening financial controls to avoid the accumulation of new debt.
In addition, it is important to mention that as part of our revenue generation initiatives, Gauteng Provincial Government is working closely with municipalities to collect what we call provincial own revenue. In this regard, as at 31 December 2025 municipalities owed the province a total of R2.030 billion for motor vehicle license fees.
OUTSTANDING CREDITORS AS AT 31 DECEMBER 2025 (Payment of suppliers within 30 days)
Gauteng municipalities have reported an aggregated creditor’s balance amounting to R37.9 billion as at 31 December 2025, which is a significant decrease from R53.2 billion reported in November 2025. The main contributor to this reduction was the City of Tshwane which reported creditors of R5.7 billion compared to R18.3 billion reported in November 2025. The bulk of the aggregated creditor’s balance relates to bulk electricity, accounting for 53.7% of the total creditors followed by trade creditors at 30%.
In this period three municipalities, namely the City of Ekurhuleni, Midvaal Local Municipality, Mogale City were able to pay their suppliers within 30 days during this period. Sedibeng still has a balance of over 90 days.
ESKOM DEBT RELIEF PROGRAMME
In 2023 the National Treasury granted approval to five municipalities in Gauteng to participate in the Eskom Debt Relief Programme. These municipalities are Emfuleni, Lesedi, Mogale City, Rand West City and the Merafong City.
The Municipal Debt Relief is for a period of 36 months only and is a leverage on government’s bigger proposal of a debt relief package for Eskom. All the municipalities’ 36 months will end in 2027.
There are 14 conditions set out in MFMA Circular 124 which these municipalities should comply with monthly to qualify for the write-off. These conditions are essentially aimed at restoring a set of basic minimum financial management best practices in municipalities owing Eskom and change the municipal culture of not paying bulk suppliers and a municipal and Eskom culture to not collect revenue.
Rand West City was the first municipality to receive a write-off of R279.7 million from the ring-fenced debt of R839.7 million after complying with the conditions of the Eskom Debt Relief programme, followed by Emfuleni and Mogale City which were granted their first 1/3 write-off on the 16th of December 2024 and 20th of February 2025 amounting to R1.9 billion and R72.1 million respectively. All these municipalities are awaiting National Treasury’s approval of their second write-off.
Lesedi and Merafong City completed the first cycle at the end of November 2024 and second cycle in November 2025, however a final assessment has yet to be finalised by National Treasury to determine whether they qualify for the write off or not. Mogale City is one of the best performing municipalities under the debt relief programme and the municipality has adopted a funded budget and continually paying its current ESKOM account.
Emfuleni LM signed a Distribution Agency Agreement (DAA) with Eskom and entered into a Special Purpose Vehicle (SPV) agreement with Rand Water Services which plays a key role in Debt Management between the municipality and the two entities.
COUNCILLORS AND OFFICIALS OWING FOR SERVICES, RATES AND TAXES
Payment of suppliers within 30 days is not discretionary; it is a legal requirement in terms of Section 65(2)(e) of the – Municipal Finance Management Act, In enforcing the legal requirement that suppliers be paid within 30 days, government is also addressing outstanding debt owed to municipalities by public office bearers.
As at 31 December 2025, municipal Councillors and officials collectively owed municipalities approximately R165.7 million, with the largest balances recorded in the City of Johannesburg (R74.8 million), the City of Tshwane (R36.2 million), and the City of Ekurhuleni (R22.9 million). These amounts are primarily attributable to municipal officials. Formal correspondence has been issued to municipalities to enforce recovery measures and ensure compliance by Councillors and officials.
In total Councillors in various municipalities in Gauteng owe municipalities an aggregated amount of R 5.5 million. It must be noted that Councillors who owe their respective municipalities except for those in the City of Ekurhuleni, each have outstanding balances on their accounts ranging from R100 000 and above.
In addition, officials owe their respective municipalities a total of R160,2 million as at 31 December 2025. In this regard, the City of Johannesburg is leading with R72 million owed by officials, followed by the City of Tshwane, City of Ekurhuleni and Emfuleni with the debt of over R10 million each.
CONCLUSION
In conclusion, the Gauteng Provincial Treasury continues to support and monitor the progress on municipal spending against the projections to meet service delivery objectives to communities. That is why amongst other things, we have introduced the following initiatives:
Advisors Programme
The department has appointed 10 municipal advisors, through a Municipal Finance Hands-On Support Programme (MFHSP) to provide technical hands-on support to selected municipalities in the province. Amongst some notable achievements due to the programme is an improvement in the (2023/24) audit outcomes such as reduced audit findings in most of our municipalities. The advisors will continue to work with municipal officials in improving their budgeting techniques with a view of reducing the number of municipalities tabling the unfunded budgets.
Debt Management Committee
In collaboration with the Gauteng Department of Co-operative Governance and Traditional Affairs, we established an intergovernmental structure known as the Debt Management Committee. Since the establishment of the DMC in the 2017/18 financial year, municipalities have received a cumulative total of R21.04 billion in payments from the Gauteng Provincial Government. The largest share of these payments has consistently been directed to the three metropolitan municipalities, reflecting both the scale of services rendered and historical account backlogs, with Emfuleni Local Municipality also receiving a significant portion relative to other local municipalities.
This track record demonstrates that, while outstanding balances remain at a point in time, the DMC has been an effective platform for systematic debt reduction, account verification, and structured settlements., reinforcing the commitment to honour our obligations and supporting municipal financial sustainability.
FACT SHEET – GAUTENG STATE OF MUNICIPAL FINANCES 1. OPERATING REVENUE AND EXPENDITURE
Table 1: Gauteng Aggregated revenue as at 1st Quarter ending 31 December 2025
R thousands
Main appropriation
First Quarter Actual
Actual Expenditure
Budget Adjusted
2025/26 1st Q as % of
Main appropriation
Second Quarter
2nd Q as % of Main appropriation
Year to Date
Actual Total Expenditure Expenditure as
% of adjusted budget
Budget
Expenditure
Operating Revenue Operating Revenue Exchange Revenue
229 088 622
229 154 444
63 946 141 27,9%
59 436 780 25,9%
123 382 921
53,8%
Service charges – Electricity
Service charges – Water
Service charges – Waste Water Management
Service charges – Waste Management
Sale of Goods and Rendering of Services
Agency services
Interest ——– Interest earned from Receivables 3 781 073 3 781 073 1 729 378 45,7% 1 980 960 52,4% 3 710 337 98,1%
Dividends ——–
81 945 080 30 522 060 16 201 502
81 945 080 30 522 060 16 201 502
22 111 700 27,0% 7 138 160 23,4% 4 058 985 25,1% 2 016 824 24,4%
18 732 801 22,9% 7 759 330 25,4% 3 941 431 24,3% 1 868 513 22,6%
40 844 502 14 897 490 8 000 416 3 885 337 875 863 446 536
49,8% 48,8% 49,4% 47,1% 48,1% 46,5%
8 256 354 1 820 412 960 152
8 256 354 1 820 412 960 152
447 804 24,6% 226 068 23,5%
428 059 23,5% 220 468 23,0%
| Interest earned from Current and Non Current Assets | 615 134 | 615 134 | 110 651 | 18,0% | 71 096 | 11,6% | 181 747 | 29,5% |
Rent on Land –1393
– 28 533
– 29926
–
42,8% 59,8% – 50,1%
50,3% 55,5% 31,0% 30,8% 81,5% 77,1% 47,7% 61,8%
(11,0%) (,1%)
–
Rental from Fixed Assets 913 956 Licence and permits 45 616 Special rating levies – Operational Revenue 1 905 299
Non-Exchange Revenue
Property rates 44 276 203 Surcharges and Taxes 375 227 Fines, penalties and forfeits 1 625 127 Licences or permits 6 550 Transfer and subsidies – Operational 25 467 149
Interest 1
Fuel Levy
Operational Revenue Gains on disposal of Assets Other Gains
Discontinued Operations
913 956 45 616
–
905 299
276 203 375 227 625 127
6 550 532 971 368 235 034 082 755 574 4211 209 626
–
213 425 23,4% 10 945 24,0% – –
520 447 27,3%
780 538 24,3% 100 897 26,9% 225 351 13,9%
1 079 16,5% 157 559 43,8% 560 927 41,0% 297 003 28,6% 237 457 31,4%
(71) (1,7%) (376) (,2%) – –
177 359 16 353
19,4%
390 784 27 298
–
955 069
955 069
266 508 208 212 503 712
2 019 804 300 054 573 831 957 466 971
(461) (175) –
368 235 8 034 082 755 574 4211 209 626
–
646 741 493 647 534 954 229 513
37,9% 36,1% 19,1% 30,4%
1 44
1
25 1 8
10
11 2
11
9 1
434 623
485 970 107 315 278 361
22,8%
25,9% 28,6% 17,1%
22
20 1 3
- Gauteng municipalities generated operational revenues amounting to R123.3 billion or 53.9 billion of the annual budget in the first half of this financial year.
- Metros were the primary contributors to operation revenue (City of Ekurhuleni – R34.5 billion; City of Johannesburg – R48.5 billion and City of Tshwane – R27.6 billion).
- Operating expenditure incurred during this period amounted to R109.2 billion, representing 49.2% of the annual budget. The main contributors being the metropolitan municipalities.
- As a result, most Gauteng municipalities have generally been functioning within the adopted budget during the first half of this financial year.
- The collection rate for the majority of Gauteng municipalities as at the end of December 2025 was R30.1 billion, or 116%, which is higher than the 95% expected standard (as per MFMA Circular 71).
35,8% – –
940 14,4%
(390) (9,3%) 202 ,1% – –
2. CAPITAL BUDGET AND EXPENDITURE
• Capital expenditure budget for 2025/26 FY is R16.2 billion, an increase from R14.9 billion in 2024/25. As of 31 December 2025, total expenditure was R5.4 billion, accounting for 34% of the annual budget.
The performance of individual Grants.
- ✓ Municipal Infrastructure Grant (62%)
- ✓ Integrated Urban Development Grant (52%)
- ✓ Water Services Infrastructure Grant (46%)
- ✓ Urban Settlements Development Grant (23%)
- ✓ Neighbourhood Development Partnership Grant (34%)
- ✓ Integrated Electrification Programme Grant (59%)
- ✓ Public Transport Network Grant (21%)
3. GPG DEBT TO MUNICIPALITIES
- The Gauteng Provincial Government’s (GPG) outstanding debt to municipalities amounted to R2 billion as at the end of December 2025 following payments of R101.7 million against a total billed amount of R2.19 billion.
- The debt profile is largely concentrated within the three metropolitan municipalities, the City of Johannesburg, City of Tshwane, and City of Ekurhuleni, which together account for the majority of the outstanding balance.
- The main drivers of the provincial debt are the Departments of Infrastructure Development accounting for 51% of the Debt, followed by Education at 33%, and Health at 12%. While progress has been made through targeted payments, the current debt levels remain significant and require sustained intervention.
- Provincial Treasury and COGTA working via intergovernmental structure called the Debt Management Committee (DMC) continue to engage municipalities to verify accounts, resolve historical discrepancies, and implement payment plans aligned to available cash flows.
- Since the establishment of the DMC in the 2017/18 financial year, municipalities have received a cumulative total of R21.04 billion in payments from the Gauteng Provincial Government. Metros received the largest share of these funds, reflecting both the scale of services rendered and historical account backlogs. Emfuleni Local Municipality also receiving a significant portion relative to other local municipalities.
- In addition, it is important to mention that as part of our revenue generation initiatives, Gauteng Provincial Government is working closely with municipalities to collect what we call provincial own revenue. In this regard, as at 31 December 2025 municipalities owed the province a total of R2.030 billion for motor vehicle license fees.
4. COUNCILLORS AND OFFICIALS OWING FOR SERVICES, RATES AND TAXES
Table 2: Councillors and official’s debt to municipalities
| Municipalities | Debt Owed by Municipal Councillors | Debt Owed by M unicipal O fficials | T otal |
| R’0 | |||
| City of Ekurhuleni | R1 927,70 | 22 890 735,83 | 22 892 663,53 |
| City of Johannesburg | 1 967 936,21 | 72 838 958,33 | 74 806 894,54 |
| City of Tshwane | 1 611 463,10 | 34 573 953,23 | 36 185 416,33 |
| Lesedi LM | – | ||
| Emfuleni LM | 632 305,56 | 18 179 505,28 | 18 811 810,84 |
| Midvaal LM | 139 310,49 | 293 546,04 | 432 856,53 |
| Merafong City LM | 397 042,00 | 3 489 643,00 | 3 886 685,00 |
| Mogale CityLM | 172 867,88 | 2 630 254,75 | 2 803 122,63 |
| Rand West City LM | 579 397,65 | R5 339 318,49 | 5 918 716,14 |
| TOTAL | 5 502 250,59 | 160 235 914,95 | 165 738 165,54 |
- As at 31 December 2025, municipal Councillors and officials collectively owed municipalities approximately R165.7 million, with the largest balances recorded in the City of Johannesburg (R74.8 million), the City of Tshwane (R36.2 million), and the City of Ekurhuleni (R22.9 million).
- Formal correspondence has been issued to municipalities to enforce recovery measures and ensure compliance by Councillors and officials.
- In total Councillors owe municipalities an aggregated amount of R 5.5 million. Councillors who owe their respective municipalities except for those in the City of Ekurhuleni each have outstanding balances on their accounts ranging from R100 000 and above.
- In addition, officials owe their respective municipalities a total of R160,2 million as at 31 December 2025. In this regard, the City of Johannesburg is leading with R72 million owed by officials, followed by the City of Tshwane, City of Ekurhuleni and Emfuleni with the debt of over R10 million each.
5. OUTSTANDING CREDITORS AS AT 31 DECEMBER 2025 (Payment of suppliers within 30 days)
- Gauteng municipalities have reported an aggregated creditor’s balance amounting to R37.9 billion as at 31 December 2025, which is a significant decrease from R53.2 billion reported in November 2025. The main contributor to this reduction was the City of Tshwane which reported creditors of R5.7 billion compared to R18.3 billion reported in November 2025. The bulk of the aggregated creditor’s balance relates to bulk electricity, accounting for 53.7% of the total creditors followed by trade creditors at 30%.
- In this period three municipalities, namely the City of Ekurhuleni, Midvaal Local Municipality, Mogale City were able to pay their suppliers within 30 days during this period. Sedibeng still has a balance of over 90 days.
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