The 2026 budget allocates R951.7bn to national government, R810.5bn to provinces and R182.3bn to local government in 2026/27 — in line with the division of revenue framework set out in the budget.
These allocations translate into shares of approximately 48.9% for national government, 41.7% for provinces and 9.4% for local government.
The national allocation of R951.7bn funds national departments and public entities after providing for debt service costs and the contingency reserve within the broader fiscal framework.
National departments are responsible for defence, policing, justice administration, higher education, infrastructure co-ordination and the administration of social protection programmes that operate across provinces.
Provinces receive R810.5bn in 2026/27. Provincial governments carry primary responsibility for basic education, health services, provincial roads, social development services and agricultural support functions. Transfers are made through the provincial equitable share and conditional grants governed by formula allocations and grant frameworks.
The budget notes continued operational and financial pressures within provincial administrations, including compensation costs and service delivery demands.
Local government receives R182.3bn in 2026/27. Municipal transfers are structured through the local government equitable share and a range of conditional grants. These allocations support water, sanitation, electricity distribution, refuse removal and local roads.
The Budget Review records that 63% (162) of municipalities were in financial distress in 2023/24, highlighting ongoing fiscal and governance challenges at the local level.
In the 2026 budget speech, the minister stated the framework marks a shift from oversight to more direct structural intervention in subnational government, particularly where municipalities fail to meet financial management standards.
The budget confirms tighter conditions attached to transfers and strengthened enforcement mechanisms under the division of revenue framework.
Treasury’s municipal analysis projects aggregate municipal revenue rising from approximately R675.8bn in 2025/26 to an estimated R712.6bn in 2026/27. Aggregate municipal expenditure is projected to increase from around R698bn to R728.3bn over the same period.
The gap between projected revenue and expenditure reflects continued fiscal pressure at the municipal level, particularly from bulk purchases of electricity and water and the management of conditional grants.
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