National Treasury: Draft MFMA Amendment Bill 2026

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National Treasury: Draft MFMA Amendment Bill 2026

• 06 November 2026
• Law
• South African Accounting Academy

Summary:

The National Treasury has published the draft Local Government: Municipal Finance Management (MFMA) Amendment Bill 2026 (the first comprehensive review of the MFMA in 23 years) to reform and strengthen local government finances.

 

Article:

The draft Municipal Finance Management Amendment Bill applies to municipalities and other institutions in the local sphere of government, as well as municipal officials, councillors, service providers, and relevant oversight authorities, and seeks to:

• replace ‘rigid numerical rule’ with ‘fiscal sustainability’ as the standard underpinning public finance management at local level
• require each administration to:
  • ‘commit to its own fiscal objectives, consistent with the electoral mandate’
  • ‘report against it’ at each annual budgetary review, and
  • ‘explain any material deviation to Parliament’, and to
• empower the Financial & Fiscal Commission to ‘independently report on the consistency of the fiscal framework with the administration’s fiscal plan’.

Main Objectives of the Draft MFMA Bill 2026

• Ensuring Funded Budgets: Require municipalities to prove and adopt genuinely funded budgets rather than paper or unbalanced budgets.
• Improving Revenue Management & Collection: Strengthen revenue collection frameworks—including reliable recovery of development charges from new land development projects—while protecting basic services for poor households.
• Strengthening Accountability & Governance: Clarify roles and responsibilities across councils, mayors, and officials, and increase governance and transparency around the appointment of municipal Chief Financial Officers (CFOs).
• Enforcing Personal Liability & Penalties: Introduce personal liability for councillors or service providers whose actions result in financial losses, alongside statutory monetary penalties for violations of the MFMA (2003).
• Streamlining Misconduct & Loss Recovery: Simplify the process for investigating unauthorized, irregular, fruitless, and wasteful expenditure and enhance the recovery of lost funds.
• Enabling Early Intervention in Distressed Municipalities: Enhance National Treasury oversight and create a clearer, earlier framework for financial recovery and intervention when municipalities face severe financial distress.
• Shifting to Fiscal Sustainability: Replace rigid numerical rules with a broader standard of "fiscal sustainability," requiring administrations to commit to clear fiscal objectives and report material deviations.

Access the memorandum accompanying the draft legislation at https://www.treasury.gov.za/DocumentsForComments/Memo%20on%20Objects%20Municipal%20Finance%20Management%20Amendment%20Bill%20for%20public%20comment.pdf 

Published alongside the Draft PFMA and related laws Amendment Bill 2026.

Comments are due by 29 January 2027.

Click here to download the 63-page document:

https://www.treasury.gov.za/DocumentsForComments/Municipal%20Finance%20Management%20Amendment%20Bill%20for%20public%20comment.pdf

 

Relevance to Auditors, Independent Reviewers & Accountants:

• The MFMA is yet another piece of legislation that your relevant municipal departmental clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• The Draft Municipal Finance Management Amendment Bill 2026 applies to municipalities and other institutions in the local sphere of government, as well as municipal officials, councillors, service providers, and relevant oversight authorities.
• As an auditor and independent reviewer, you need to be aware of the latest legislation and proposed amendments to legislation in the public sector.

Relevance to Your clients:

• The Draft Municipal Finance Management Amendment Bill 2026 applies to municipalities and other institutions in the local sphere of government, as well as municipal officials, councillors, service providers, and relevant oversight authorities.
• These clients should be aware of the latest legislation and proposed amendments to legislation in the public sector.

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