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National Treasury: New Guidance for Municipal Budget Preparation
- 25 February 2026
- Miscellaneous
- South African Accounting Academy
Summary:
The National Treasury has issued MFMA Circular No. 132, providing important guidance to municipalities on the preparation of the 2026/27 Medium-Term Revenue and Expenditure Framework (MTREF).
Article:
The circular focuses on aligning municipal budgets with the latest Municipal Standard Chart of Accounts (mSCOA) requirements and sustainable financial management practices.
This circular supports municipalities in strengthening budget practices and advancing financial management reforms by focusing on key “game changers”, including ensuring that budgets are funded, optimising revenue management, improving asset management, adhering to supply chain processes, correctly implementing mSCOA, and addressing audit findings.
Key Focus: The circular assists municipalities in navigating the 2026/27 budget process, ensuring compliance with updated municipal financial standards.
Context: It follows previous, similar guidance aimed at enhancing accountability, such as the implementation of mSCOA and strengthening financial management.
Why this matters for finance professionals:
Municipal leaders and practitioners should take note of several strategic priorities:
- Funded and credible budgets – Budgets must meet minimum requirements and support long-term sustainability.
- Enhanced revenue management – Strengthening the revenue value chain is central to improving municipal viability.
- Alignment with reform agenda – Budget preparation must reflect broader financial management reforms and infrastructure priorities.
- Consideration of macroeconomic projections – Inflation is projected to average 3.7% in 2026/27, informing municipal planning assumptions.
Who should engage with this circular?
- CFOs and finance teams
- Budget and treasury offices
- Municipal managers
- Internal audit and governance practitioners
- All officials involved in MTREF preparation
All GRAP Hub participants are encouraged to familiarise themselves with the requirements early to support credible budgeting, strengthen financial governance, and improve service delivery outcomes.
Click here to download the compressed folder containing all the relevant documents:
https://mfma.treasury.gov.za/Circulars/MFMA%20Budget%20Circular%20No.%20132%20-%20202627%20MTREF.zip
Relevance to Auditors, Independent Reviewers & Accountants:
- The MFMA is yet another piece of legislation that your relevant national and provincial 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.
- Practitioners should be aware of the latest guidance that has been published by National Treasury.
Relevance to Your clients:
- A municipal entity must comply with the MFMA.
- Municipal entities should be aware of the latest guidance that has been published by National Treasury.