The National Treasury (NT) indicated to the Committee that they had continuous engagement with municipalities to discuss certain issues which contributed to poor financial management and performance by municipalities. The National Treasury also indicated that there is poor financial management capacity, inappropriately qualified staff and high staff turnover in the Budget and Treasury offices of municipalities, as well as key service delivery departments. There was preparation of poor quality budget documentation with weak linkages to the IDP and, municipal budgets were not credible. The NT has observed weak political oversight on the preparation and implementation of budgets. There was political interference in administrative decision making, which often undermines the principles of good governance and places the sustainability of municipal finances at risk.