Pretoria: The National Treasury has released the operating and capital budgets for municipalities as adopted by their respective councils, aiming to empower communities to hold their municipal councils accountable. These budgets provide a comprehensive overview of expected revenue and expenditure trends in Local Government over the next three years, referred to as the 2025/26 Medium Term Revenue and Expenditure Framework (MTREF).

According to South African Government News Agency, the operating and capital budgets are now accessible on the National Treasury’s website. These figures are compiled from annual budgets that municipal managers are required by law to submit to both the National Treasury and the relevant Provincial Treasury. Additionally, the National Treasury employs this data for the In-Year Management, Monitoring and Reporting System for Local Government (IYM).

The Section 71 reports, published quarterly by the National Treasury, offer an account of actual revenue collection and municipal spending against budgeted figures. This data is also available on the Municipal Money open Local Government data portal.

Key highlights from the released budgets include an aggregated budgeted revenue for 2025/26 of R675.8 billion, projected to rise to R712.6 billion in 2026/27 and R753.5 billion in 2027/28. Municipal expenditure is estimated at R698.0 billion for 2025/26, increasing to R728.3 billion in 2026/27 and R764 billion in 2027/28, marking a 7.4% increase from the 2024/25 financial year budget.

The data also reveals that municipalities are expected to experience operating deficits in the 2025/26 financial year, as expenditure grows faster than revenue. However, this deficit is projected to decrease in the following years of the MTREF. A net surplus of R8.5 billion is anticipated for 2025/26, improving from a R1.9 billion deficit in the 2024/25 adjusted budget, with further surpluses projected for subsequent years.

Major cost drivers include employee-related costs and bulk purchases, comprising 27.0% and 35.0% of operating expenditure, respectively. Municipalities are challenged by high electricity and water tariffs, changing consumption patterns, and increased bad debt due to affordability issues.

Capital expenditure is set to rise by 1.9% to R78.9 billion in 2025/26, though its percentage of total expenditure is expected to decline over the MTREF period. Trading services will account for 52.1% of the total capital expenditure in 2025/26, increasing in subsequent years.

The 2025/26 capital expenditure budget includes a R45.7 billion investment in new infrastructure, making up 57.9% of the total capital budget. Investment in renewing and upgrading existing assets is lower, with allocations of R14.9 billion and R18.4 billion, respectively. Additionally, R38.3 billion is designated for repairs and maintenance in 2025/26, with increases slated for the following years.