Finance Minister Enoch Godongwana has intensified pressure on the City of Johannesburg, warning that the municipality could lose a crucial portion of its national funding if it fails to resolve serious financial concerns before the end of the month.
The warning follows mounting concerns about the city’s financial stability after the Auditor-General issued a qualified audit opinion for the 2024/25 financial year. The findings painted a troubling picture of Johannesburg’s finances and raised questions about the credibility of the municipality’s revenue projections, expenditure management and long-term financial sustainability.
In a written response to Parliament, Godongwana outlined the steps the city must take to avoid financial sanctions, making it clear that government intervention remains a real possibility if corrective measures are not implemented urgently.
Godongwana Demands Action on Unfunded Budget
At the centre of the dispute is Johannesburg’s unfunded adjustments budget, which was adopted in March despite concerns about whether projected revenue would be sufficient to cover planned expenditure.
Godongwana has repeatedly expressed concern about the municipality’s financial management and has instructed city officials to address what he describes as significant credibility challenges in both revenue and expenditure planning.
The minister argues that the city’s current financial position places service delivery and long-term fiscal stability at risk. As a result, he has set clear conditions that Johannesburg must meet in order to restore confidence in its finances.
Among the key requirements is the adoption of a fully funded budget for the 2026/27 financial year. Godongwana believes this is essential to ensuring that the city only commits to spending that can realistically be supported by anticipated revenue.
The demand reflects growing concern within government that municipalities across the country are increasingly struggling with budget sustainability and financial governance.
Another major issue highlighted by Godongwana is a wage agreement valued at approximately R10.3 billion.
The finance minister has described the agreement as completely unaffordable and believes it contributes significantly to the city’s financial difficulties.
He has instructed Johannesburg to review the wage arrangement as part of efforts to place municipal finances on a more sustainable footing.
The wage bill has become a contentious issue in many municipalities, where rising personnel costs often consume a substantial portion of available revenue. Critics argue that excessive salary commitments can limit a municipality’s ability to invest in infrastructure, maintenance and service delivery.
For Godongwana, addressing the wage agreement is a critical component of restoring financial discipline and ensuring that public funds are used responsibly.
His concerns mirror broader national debates about balancing employee compensation with fiscal sustainability in the public sector.
The strongest message from the minister relates to the consequences Johannesburg could face if it fails to comply with the conditions outlined by National Treasury.
In his parliamentary response, Godongwana stated that all issues raised in his previous correspondence with the city council must be resolved by the end of the month.
Should the municipality fail to meet these requirements, he intends to invoke Section 216(2) of the Constitution.
This constitutional provision gives National Treasury the authority to stop the transfer of funds to organs of state that fail to comply with prescribed financial management standards.
If implemented, the measure would result in Johannesburg losing its July equitable share allocation from national government.
The equitable share is a critical source of revenue for municipalities, helping to fund essential services such as water, sanitation, electricity, roads and waste management.
The prospect of having these funds withheld underscores the seriousness of the concerns raised by Godongwana and highlights the growing tension between National Treasury and the city administration.
The financial crisis has also become a political battleground.
The Democratic Alliance (DA) has been among the most vocal critics of Johannesburg’s budget and financial management practices.
Last week, the party threatened legal action against Godongwana, arguing that stronger intervention is necessary to prevent further deterioration of the city’s finances.
The DA maintains that Johannesburg’s projected revenue will not be sufficient to support its planned spending commitments for the 2026 financial year.
Party representatives have urged the minister to take decisive action to protect taxpayers and prevent the city from falling into deeper financial distress.
The debate has intensified scrutiny of Johannesburg’s leadership and increased pressure on municipal officials to demonstrate that they have a credible plan for restoring financial stability.
Adding to the pressure, Johannesburg’s senior executives are scheduled to appear before Parliament’s Standing Committee on Public Accounts (SCOPA).
The committee is expected to examine the city’s audit outcomes and question officials about the issues identified by the Auditor-General.
The hearing will provide lawmakers with an opportunity to assess the municipality’s financial management practices and determine whether sufficient corrective action is being taken.
For Godongwana, the upcoming parliamentary scrutiny represents another important step in ensuring accountability.
The minister has made it clear that government expects urgent improvements in financial governance and budget credibility.
As the deadline approaches, all eyes will be on Johannesburg’s leadership to see whether it can satisfy Treasury’s demands and avoid losing a vital source of funding.
With the threat of withheld allocations looming, Godongwana has signalled that government is prepared to use its constitutional powers to enforce financial discipline and protect public finances. The coming weeks could prove decisive for the future financial stability of South Africa’s largest metropolitan municipality.
Source- EWN
