By Thapelo Molefe
Democratic Alliance (DA) Johannesburg mayoral candidate Helen Zille says a damning letter from Finance Minister Enoch Godongwana confirms the City of Johannesburg is in deep financial distress, warning the metro is effectively “bankrupt” and unable to sustain basic services.
Briefing the media on Wednesday, Zille described the letter sent to executive mayor Dada Morero as “unprecedented” in its bluntness, saying it details unlawful financial decisions that have pushed the city to the brink.
“In all my years in politics I haven’t read a letter quite so forthright and quite so blunt,” Zille said.
“What the minister is saying is that Joburg is bankrupt.”
According to the letter, the city owes creditors R25.2 billion while holding only R3.9 billion in cash and cash equivalents, leaving a shortfall of more than R21 billion.
“This is a marker of severe financial distress, indicating that the city does not have the liquidity required to pay its creditors,” the minister wrote.
Zille said the financial crisis is directly linked to collapsing service delivery.
“It explains why circuit breakers cannot be replaced in substations, why there are no spare parts to fix water leaks, and why infrastructure maintenance has ground to a halt across Joburg,” she said.
The minister warned that the city’s financial mismanagement violates municipal finance laws and threatens Johannesburg’s sustainability, with potential knock-on effects for the national economy.
The letter states that these violations “suggest a deterioration in the City’s governance and overall financial health”.
National Treasury has given formal notice it may invoke Section 216(2) of the Constitution to withhold the city’s equitable share allocation if urgent corrective measures are not taken.
“In the event that the City is not willing to remedy this situation with immediate effect… the National Treasury will invoke Section 216(2) of the Constitution,” the minister said.
The allocation, estimated at more than R8 billion, is used to subsidise basic services, particularly for indigent households.
The letter also details a series of financial setbacks, including the refusal of a R2.5 billion loan by the French Development Agency after the city failed to meet conditions linked to a previous facility, and the suspension of Johannesburg’s bonds by the Johannesburg Stock Exchange for failing to submit audited financial statements on time.
Treasury further found that the city’s 2025/26 adjustment budget is unfunded, with revenue overstated and expenditure understated.
“The adjustments budget was assessed by National Treasury to be unfunded; revenue collection was overstated while expenditure was understated,” the letter states.
It warns this could result in unauthorised expenditure by June, placing further strain on already stretched finances.
Zille said the findings confirm long-standing concerns raised by the DA.
“The minister is saying your adjustment budget is based on false assumptions,” she said.
The minister also flagged continued non-compliance with the Municipal Standard Chart of Accounts regulations, nearly nine years after their implementation deadline, citing weaknesses in system integration and financial reporting.
The city has also failed to submit requested information on unauthorised, irregular, fruitless and wasteful expenditure.
“To date, we have not received any information from the City,” the minister wrote.
The letter further notes that the municipality is not meeting its obligation to pay creditors within 30 days, with outstanding debt rising from R17 billion in 2022/23 to R25.2 billion in 2024/25.
Treasury also raised concern over a R10.3 billion wage agreement with the South African Municipal Workers Union, warning the city cannot afford the increases.
“You are hereby directed to stop proceeding with the implementation of this illegally signed agreement,” the minister said.
Zille said the DA would seek to hold councillors and officials personally liable for unlawful expenditure under the Municipal Finance Management Act.
“We have consistently warned in council that these decisions were unlawful,” she said.
Responding to questions, Zille said placing the city under full administration in terms of Section 139 of the Constitution could lead to the dissolution of council, but suggested financial administration may be a more practical intervention.
“If there is a mechanism in law to put the city under financial administration, that would be preferable,” she said.
She warned that without urgent intervention, service delivery would deteriorate further, with the poorest residents expected to bear the brunt of the crisis.
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