What the 2026 budget means for local households: Hope, but hold the applause SALGA said it was not convinced that South Africa’s gross loan debt would stabilise for the first time in 17 years after peaking at 78.9% of gross domestic product (GDP) in 2025/26.
Image: Karen Sandison/ Independent Newspapers.
The South African Local Government Association (SALGA) has disputed National Treasury’s claim that national debt is stabilising and has called for a holistic approach to address debt across all spheres of government, warning that fiscal pressures are filtering down the governance chain.
Commenting on the 2026/27 budget allocation proposals before Parliament, SALGA said it was not convinced that South Africa’s gross loan debt would stabilise for the first time in 17 years after 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 proposals that total government debt reached roughly R5.3 trillion in 2023/24, with debt-servicing costs consuming 15% — or R356 billion — of total government spending.
SALGA chief executive Lerato Phasha said the organisation does not believe the debt has stabilised.
“We have seen the debt rising. The national debt has been increasing since 2022. When debt rises, it places fiscal pressure on all of us and means there is less money available for basic and essential services in the country. We therefore do not support the notion that the debt has stabilised,” Phasha said.
She said SALGA was advocating for a holistic approach to debt, including addressing debt at municipal level, both from creditors and customers, as well as national government debt.
“There is no clarity in terms of how state capacity will be improved, particularly regarding human capital and skills development,” she said.
“We can bring in all the money we want into the system and introduce reforms, but if municipalities are not well capacitated and continuously upskilled, we may not achieve the desired outcomes. We are therefore lobbying for capacity-building and performance management support to be incorporated into the current reforms.”
SALGA also accused government of bias in enforcing consequence management for financial mismanagement and corruption and called for stronger governance reforms at national level.
Responding to the 2026/27 budget allocation proposals, Phasha said the outcomes of the reforms currently under way should be supported by scenario modelling to assess their implications before they are implemented or adopted by Parliament.
She noted that the Auditor-General had reported R538 billion in irregular expenditure, with 78% of high-impact auditees under the Public Finance Management Act (PFMA) recording material compliance findings.
Phasha also highlighted that 64% of projects experienced delays, 25% of implemented projects were of poor construction quality, and R10.3bn in fruitless expenditure had been recorded over the past five years.
Despite this, she said National Treasury had not invoked Section 216 of the Constitution regarding non-compliance with PFMA norms and standards in national departments, while local governments have faced such interventions since 2015.
“We see bias from National Treasury regarding consequence management within government. We would like the committee to investigate this issue so that performance requirements apply across all spheres of government, as we all serve one customer,” Phasha said.
“We are requesting Parliament to hold National Treasury accountable for what appears to be bias in consequence management. While consequence management is being implemented in municipalities and we are helping them comply with existing norms and standards, we see it applied in a one-sided manner, as it is not being implemented at national and provincial levels.”
Phasha said SALGA was not oblivious to corruption and weaknesses in financial management at municipal level, but noted that similar challenges also exist in provincial and national government.
She added that the equitable share data used to determine funding for poor households was outdated, meaning allocations may not adequately support service delivery.
“We believe municipalities are inadequately funded. Our studies show that municipal expenditure has surpassed the revenues and allocations currently being received. The White Paper has already highlighted some of these structural issues,” Phasha said.
She said SALGA’s priorities include capacity building, infrastructure investment, and improved asset management in municipalities, supported through conditional grants.
Phasha also warned that political parties must be more careful about whom they deploy to local government positions.
“In local government, SALGA needs to work collaboratively with National Treasury, the Department of Cooperative Governance (COGTA), and academia to design a five-year capacity-building programme. This programme should address financial and infrastructure challenges while integrating climate change considerations,” she said.
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