Treasury threatens to cut City of Johannesburg funding over R10.3bn wage deal

Letter orders city to halt implementation

In a letter dated April 23 seen by Bloomberg, Godongwana said the two‑year pact was signed illegally and directed the city to stop implementing the agreement. 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,” the letter states. “You very well know this city can’t afford this agreement.”

Funding at risk ahead of local elections

Godongwana warned that funding could be withheld from July. The threat comes as he seeks to shore up confidence in national finances while municipal governance remains a political flashpoint for the ruling African National Congress.

Local elections are scheduled for November 4, and the warning adds to scrutiny of Johannesburg’s financial management ahead of voters heading to the polls.

Political and fiscal fallout

The opposition Democratic Alliance seized on the minister’s warning. DA mayoral candidate and former party leader Helen Zille said the letter showed Johannesburg was bankrupt and used it to argue that the city cannot repair its crumbling infrastructure.

“Basically, what the minister says is Johannesburg is bankrupt,” Zille told reporters in Johannesburg.

Zille said the city owed R25.2 billion at the end of the 2024-25 financial year and had only R3.9 billion in cash. She said if Godongwana withholds funds it would mean the withdrawal of R8 billion “about a 10th of the city’s budget,” she added.

Financial controls and credit concern

In his letter Godongwana listed regulatory and legislative breaches he says have occurred in Johannesburg, including missed revenue targets, late payments to creditors and opaque finances. He also said the city failed to address unauthorised and wasteful expenditure his ministry had warned about the previous year.

Last month, Moody’s Ratings placed the city’s Ba3 credit rating on review for a possible downgrade, after the Johannesburg Stock Exchange suspended the municipality’s debt securities over its failure to publish audited financial statements.

City response and next steps

City of Johannesburg spokespeople did not answer calls made to their mobile phones, Bloomberg reported. The minister’s letter directs the city to stop implementing the wage agreement while raising concerns about the sustainability of municipal finances.

Background reading:

• City’s wage pact was signed with the South African Municipal Workers Union (SAMWU)
• Government funding threatened to be withheld from July if the agreement stands
• Municipal elections set for November 4