With 6-million residents at risk, political parties are demanding accountability after the National Treasury warns to freeze funding to the City of Johannesburg Metropolitan Municipality, warning that the country’s economic hub is on the brink of financial collapse.
This comes after a leaked letter from Finance Minister Enoch Godongwana to Executive Mayor Dada Morero exposed a devastating reality: a city drowning in debt, unable to pay its creditors, and facing the possible loss of more than R8 billion in funding.
According to the letter, the city owes creditors R25.2 billion but has just R3.9 billion in cash, leaving a crippling shortfall of over R21 billion. Treasury describes this as “a marker of severe financial distress,” noting that the municipality does not have the liquidity to meet its obligations.
The consequences are already visible for residents, with failing infrastructure, rolling service outages, and growing frustration among communities and businesses.
At the center of the crisis is an unfunded 2025/26 adjustment budget, in violation of the Municipal Finance Management Act. Treasury said revenue was overstated while expenditure was understated, a move likely to result in unauthorised spending.
Compounding the crisis is a controversial R10.3 billion wage agreement, which the Minister has ordered the City to halt immediately.
“You are hereby directed to stop proceeding with the implementation of this illegally signed agreement,” Godongwana warned, adding that it has the “potential to destroy the sustainability of the City of Johannesburg beyond this term of Office as well as the negative impact on the national economy at large.”
The National Treasury has made it clear that Johannesburg must act “with immediate effect” to correct its finances or face the invocation of Section 216(2) of the Constitution.
Treasury said the crisis extends far beyond a funding shortfall, pointing to deep-rooted governance failures within the City. These include the inability to produce credible financial reports and the continued failure to pay suppliers within the legally required 30-day period.
The situation has worsened sharply in recent years, with debt owed to creditors ballooning from R17 billion to R25.2 billion.
Treasury also raised concerns about weak and unreliable financial systems, which have undermined transparency and made it difficult to track spending and enforce accountability.
The crisis has triggered sharp reactions across the political spectrum, with parties seizing on Treasury’s intervention as proof of long-standing failures.
The Democratic Alliance said the letter confirms years of warnings that the City was being driven into financial ruin through unlawful decisions and reckless governance.
The party is now pushing for accountability, including holding decision-makers personally liable for financial losses incurred.
Helen Zille, the DA’s Johannesburg mayoral candidate, said the party had consistently raised concerns.
“We consistently warned in Council that the above decisions, alluded to in the Minister’s letter, were unlawful and that we would pursue corrective measures under Section 32 of the MFMA.”
For ActionSA, the letter laid bare a crisis it said has long been ignored, warning that Johannesburg’s financial position is both unstable and unsustainable.
The party maintains it adopted a balanced approach supporting workers while cautioning that any wage agreement had to be lawful and affordable. It now argues those warnings were overlooked, leaving both workers and residents exposed.
Funzi Ngobeni, ActionSA Gauteng Legislature Caucus Leader, said: “The reality is now undeniable: the crisis is not resolved.”
RISE Mzansi has issued one of the strongest warnings, saying the letter confirms a pattern of governance failure that is pushing the City deeper into crisis.
The party argues that leadership has ignored financial laws, overstated revenues, and made commitments it cannot sustain placing millions of residents and businesses at risk.
Makashule Gana, the party’s Chief Organiser, said: “To ignore its prescripts is akin to building a house without plans; it is a recipe for structural collapse that endangers everyone inside.”
He warned that the consequences are already visible from unpaid suppliers to failing service delivery and will only worsen without urgent intervention.
According to an online publication, Daily Investor, the city said its financial statements are being finalised and are expected to be released by no later than 31 May 2026.
“The city is currently finalising its audit with the Auditor-General of South Africa, including resolving technical accounting matters through a standard dispute resolution process.”
The city explained that this is a technical issue that does not indicate it is in financial distress or cannot pay back its debts.
It also said its service delivery is not affected by the suspension, as it can fund its operations through revenue collection.
The Star