The South African Local Government Association (SALGA) disputes National Treasury’s claims that the country’s debt is stabilizing, warning that fiscal pressures are trickling down the governance chain and calling for a comprehensive approach to tackling debt across all areas of government.
Commenting on the proposed 2026/27 budget allocation in Parliament, SALGA said it was not convinced that South Africa’s gross loan debt would stabilize for the first time in 17 years, peaking at 78.9% of gross domestic product (GDP) in 2025/26, before declining slightly to 77.3% in 2026/27.
Finance Minister Enoch Godongwana said in the Budget that total government debt will reach approximately R5.3 trillion in 2023/24, with debt servicing costs accounting for 15% of total government spending (R356 billion).
SALGA CEO Lerato Pasha said the organization does not believe its debt has stabilized.
“We have seen the debt increase. The national debt has been increasing since 2022. Increasing debt puts fiscal pressure on all of us and means less funds available for the country’s basic and essential services. Therefore, we do not support the idea that the debt has stabilized,” Fasha said.
He said SALGA advocates a holistic approach to debt, including addressing debt at the municipal level and national government debt from both creditors and customers.
“There is no clarity on how national capacity will be improved, particularly with regard to human capital and skills development,” she said.
“We can put as much money into the system and introduce reforms as we want, but if local authorities do not have sufficient capacity and continuously improve their skills, we may not achieve the desired outcomes. That is why we are lobbying for capacity building and performance management support to be built into current reforms.”
SALGA also called for stronger governance reforms at the national level, accusing the government of bias in strengthening the management of financial mismanagement and the effects of corruption.
In response to the 2026/27 budget allocation proposal, Mr. Fasha said the achievements of ongoing reforms should be supported by scenario modeling to assess their impact before they are implemented or adopted by Parliament.
He noted that the Auditor General had reported R538 billion in irregular expenditures and that 78% of high-impact auditees under the Public Finance Management Act (PFMA) had recorded significant compliance findings.
Fasha also highlighted that 64% of projects were delayed, 25% of projects implemented were of poor construction quality, and R10.3 billion in wasted expenditure was recorded over the past five years.
Nevertheless, she said that the National Treasury has not invoked Article 216 of the Constitution regarding non-compliance with PFMA norms and standards in the state sector, while local governments have faced such interventions since 2015.
“We are seeing bias from National Treasury when it comes to impact management within government. We all serve the same customers, so we want the committee to look into this issue so that performance requirements apply to all areas of government,” Fasha said.
“We are calling on Parliament to hold the Treasury to account for what we believe to be bias in results management. Results management is implemented in local authorities and we support them to comply with existing norms and standards, but we believe it is being applied unilaterally because it is not being implemented at a national or local level.”
Fasha said SALGA was not indifferent to corruption and financial management weaknesses at the local government level, but noted that similar challenges existed in state and national governments.
He added that the fair share data used to determine funding for poor households was outdated, meaning allocations may not adequately support service delivery.
“We believe that local governments are underfunded. Our research shows that local government spending currently exceeds the revenues and allocations they receive. The white paper has already highlighted some of these structural problems,” Fasha said.
He said SALGA’s priorities include improving asset management in local governments supported through capacity building, infrastructure investment and conditional grants.
Fasha also warned that political parties need to be more careful about who they put into local government positions.
“In local government, SALGA needs to work with National Treasury, Cooperative Governance Authority (COGTA) and academia to develop a five-year capacity building program. This program needs to address financial and infrastructure challenges while integrating climate change considerations,” she said.
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