Finance Minister threatens to cut off Johannesburg

Johannesburg Mayor Dada Morero has been told by Finance Minister Enoch Godongwana that state funding to the city will be halted unless a R10.3 billion wage agreement is scrapped. 

Godongwana, in a letter to the mayor dated April 23 and seen by Bloomberg, said the pact with the South African Municipal Workers Union was signed illegally. The minister confirmed sending the letter when contacted by text message.

“You are hereby directed to stop proceeding with the implementation of this illegally signed agreement that has the potential to destroy the sustainability of the City of Johannesburg,” Godongwana wrote. “You very well know this city can’t afford this agreement.”

This follows a tumultuous period for the city’s finances, with it failing to release audited financial statements for the year ended 30 June 2025.

The failure has resulted in the City of Johannesburg having trading in its bonds suspended by the JSE in late March.

The suspension of trading in the City of Johannesburg’s bonds on the JSE comes after it was revealed that the municipality is facing a serious revenue crunch. 

Households, businesses, and government entities owe the city a combined R71.9 billion in rates, taxes, and levies.

This is almost enough to fund another entire budget for the city, with its annual budget of R90 billion being passed by the council before the end of March. 

 The budget notably slashed the city’s spending on key utilities, despite declining service delivery. City Power’s spending has been cut by R767 million, Joburg Water’s by R575 million, and Pikitup’s by R98.5 million.

This is partly due to the inability of these entities to collect sufficient revenue, with nonpayment and service interruptions negatively impacting sales.

Data from The Outlier shows that by December 2025, residents, businesses, and state entities owed the City of Johannesburg R71.9 billion in unpaid bills. 

Worryingly, over 70% of this is more than a year old, indicating that this revenue may never be recovered at all, regardless of any intervention from the municipality. 

The City of Johannesburg has also had its credit rating outlook downgraded by the Global Credit Rating Company (GCR) due to material uncertainty in the audit process.

The change in outlook to negative means that, as things stand, the next move in Joburg’s credit rating from GCR is likely to be a downgrade. 

A downgrade in the city’s credit rating will impact its access to financing on the JSE and result in it having to pay a higher interest rate to investors to hold its debt, increasing the cost of borrowing. 

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 city has been in talks with the National Treasury for some time to address its mounting financial troubles, despite Joburg having the largest budget of any municipality in the country. 

Godongwana has previously said the national government cannot remain a spectator and will have to step in at some point to halt Joburg’s collapse. 

President Cyril Ramaphosa lambasted Morero ahead of the G20 Summit towards the end of 2025, saying that the mayor’s city looked filthy. 

Reporting with Bloomberg.