JOHANNESBURG, Gauteng – The City of Johannesburg is in a critical race against time to avert a severe financial crisis after the National Treasury issued a final notice of its intention to withhold national government funding. The decision, driven by an unfunded budget, mounting debt, and persistent financial management concerns, leaves the metro scrambling to present a credible turnaround plan to Finance Minister Enoch Godongwana.
At the heart of the standoff is the city’s financial planning and expenditure management. In May, the MMC for Finance, Loyiso Masuku, tabled a R97 billion medium-term budget for the 2026/2027 financial year, asserting at the time that it was fully funded. However, the National Treasury disputes this, citing the city’s unfunded 2025/2026 adjusted budget—where projected expenditures exceed collected revenue—as a primary reason for the funding freeze. The city is now under strict pressure to provide clarity on its turnaround strategy to meet the Treasury’s conditions and prove the budget is genuinely funded.
To understand the gravity of the Treasury’s intervention, insights were sought from Chris Hattingh at the Center for Risk Analysis. Hattingh explained that the specific legislative section invoked by the Treasury allows the department to halt funding to any organ of state exhibiting serious or persistent breaches of expenditure controls. Beyond the unfunded budgets, the Treasury’s notice highlights the city’s failure to manage irregular expenditure and its breach of the 30-day payment rule. This financial mismanagement is evident in the metro’s massive utility debts, which currently stand at R1.2 billion owed to Rand Water and a staggering R3.7 billion owed to Eskom.
The potential withholding of national funds has severe implications for the daily operations of the City of Johannesburg. According to the analysis, a funding cut would directly cripple the city’s ability to manage its finances and execute essential spending. In the long run, this translates to a deterioration of basic infrastructure maintenance, leaving critical services such as pothole repairs, intersection maintenance, and water treatment facilities severely compromised.
When approached for comment regarding the final notice and the impending deadline, the National Treasury stated it would not be ventilating the issue in the media. Meanwhile, the City of Johannesburg had indicated it would release a statement detailing its position as the deadline approaches, though the situation remains highly tense.
The standoff extends beyond Johannesburg, serving as a critical benchmark for local governance across the country. Hattingh noted that the national government is using this move to send a strong signal to other municipalities and metros: they must act responsibly and ensure that the revenue they collect is effectively translated into service delivery.
He described the situation as a test of the national government’s willingness to enforce financial discipline. While cutting funding may cause short-term service delivery impacts and shrinking departmental budgets in Johannesburg, the ultimate goal is to force the proper allocation of resources to ensure long-term municipal stability.
