Finance minister Enoch Godongwana held a “robust and productive” meeting with Johannesburg mayor Dada Morero on Friday about the National Treasury’s “serious concerns” about the city’s finances, the finance ministry said at the weekend.
DA mayoral candidate for Johannesburg Helen Zille last week exposed a confidential letter from Godongwana to Morero in which the minister warned the metro to halt a controversial R10.3bn wage deal with municipal workers because it was effectively bankrupt.
“The mayor has agreed that he and his officials must go back and consider some serious remedial actions that will address the issues that we have raised. They will soon submit a formal report to the Treasury in response to the letter that I sent,” said Godongwana.
The letter leaked by Zille on May 6 laid bare the city’s financial collapse, revealing that it owed creditors R25.2bn while having only R3.9bn in cash and cash equivalents in hand. Zille linked the financial crisis to the collapse of municipal services in Johannesburg, which has left residents grappling with frequent water and electricity outages, poorly maintained roads, and unreliable waste collection.
In his letter, the minister said the city had violated municipal finance laws and these actions had the potential “to destroy the sustainability of the City of Johannesburg beyond this term of office as well as the negative impact on the national economy at large”.
The letter also contained formal notice to the city that if it were not willing to immediately rectify the situation, then Treasury would invoke section 216 (2) of the constitution and hold back Johannesburg’s more than R8bn allocation under the Division of Revenue Act.
Zille also drew attention to a series of recent blows to the city that have deepened its financial vulnerability, including the refusal by French development bank Agence Française de Développement to grant it additional funding after it failed to meet the terms of a R2.5bn loan granted in 2024.
The JSE suspended the city’s bonds after it failed to submit audited annual statements on time, and Moody’s has warned of further downgrades to Johannesburg’s credit rating.
The ministry of finance said Treasury had a constitutional and statutory obligation to exercise oversight over the financial affairs of municipalities and was required to act where it observed material risks to fiscal sustainability and compliance with the legislative framework governing public finances.
While the minister recognised the public interest in the matter, it was not appropriate to detail the full scope of the discussions at this stage, it said.
“Minister Godongwana assures the residents of Johannesburg that the National Treasury continues to pursue a constructive resolution to the issues that are in the interests of service delivery and financial sustainability,” it said.
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