Treasury freezes R3.6bn earmarked for Joburg as government targets financially troubled municipalities

Johannesburg is among 69 municipalities affected by Treasury’s latest financial intervention

The City of Johannesburg is facing fresh financial pressure after the National Treasury temporarily withheld R3.6 billion in equitable share funding, making it one of 69 municipalities across South Africa caught up in a nationwide crackdown on poor financial management.

In total, Treasury has frozen R13.5 billion in municipal allocations while local governments work to address financial shortcomings and comply with the Municipal Finance Management Act (MFMA).

Officials insist the move is designed to improve accountability rather than punish municipalities, but the announcement comes at a difficult time for Johannesburg, which is already dealing with mounting financial challenges.

Why Treasury has frozen the funding

Speaking during a media briefing, National Treasury Deputy Director-General for Intergovernmental Relations Ogalaletseng Gaarekwe said the decision followed repeated engagements with municipalities that continued failing to meet financial management requirements despite receiving support.

Before withholding the funds, Treasury gave municipalities an opportunity to explain why their allocations should not be suspended and invited them to submit written representations.

The intervention has been implemented under Section 216(2) of the Constitution, together with provisions of the MFMA.

According to Treasury, the aim is to encourage municipalities to improve financial governance while ensuring public money is managed responsibly.

What municipalities must do to get the money released

Treasury says municipalities will not lose the funding permanently.

Instead, they must demonstrate that they are addressing key financial problems before the withheld allocations are released.

Among the requirements are:

• Committing not to approve unfunded budgets in future.
• Submitting payment plans for outstanding debts owed to creditors such as Eskom, water boards, the South African Revenue Service (SARS), the Auditor-General and pension funds.
• Providing proof that agreed payments have been made.
• Developing plans to reduce unauthorised, irregular, fruitless and wasteful expenditure.

Gaarekwe explained that once municipalities submit acceptable payment plans, Treasury could release part of the withheld funding to allow them to settle outstanding accounts. The remaining funds would be released once payments have been verified.

She added that the process could take as little as a week or several weeks, depending on how quickly municipalities respond.

Gauteng municipalities affected

Johannesburg is not the only municipality in Gauteng affected by the intervention.

Other municipalities on Treasury’s list include:

• City of Johannesburg
• Emfuleni Local Municipality
• Lesedi Local Municipality
• Sedibeng District Municipality
• Merafong City Local Municipality
• Rand West City Local Municipality

Nationally, Treasury originally planned to withhold funding from 99 municipalities, but that number was reduced to 69 after several local governments addressed concerns raised during consultations.

Johannesburg’s financial challenges under the spotlight

The funding freeze comes just days after another setback for the City of Johannesburg.

Earlier this week, the Sheriff of the Court attached assets at Thuso House Customer Service Centre after the city failed to settle an outstanding debt of R3.4 million, forcing the temporary closure of the facility.

City officials said the payment delay resulted from system glitches that disrupted financial processes.

Executive Mayor Dada Morero confirmed that arrangements were being made to recover the attached assets and reopen the customer service centre as soon as possible, while apologising to residents for the disruption.

The latest developments have intensified scrutiny of Johannesburg’s financial management, with many residents expressing frustration on social media over ongoing service delivery challenges and governance concerns.

Will residents be affected?

Treasury maintains that the temporary withholding of funds should not disrupt municipal services.

Officials argue that equitable share allocations make up only part of municipal income, with many municipalities generating a significant portion of their revenue through property rates, service charges and other local sources.

Drawing on last year’s experience, Treasury noted that funding withheld from 75 municipalities in July was fully released by early August after the affected councils met the required conditions.

Whether Johannesburg follows a similar path will depend on how quickly it addresses Treasury’s concerns and submits the required financial recovery plans.

Mayor Dada Morero is expected to provide further details on the city’s financial position and the steps being taken to stabilise Johannesburg’s finances during a media briefing.

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