Johannesburg’s financial crisis has deepened sharply after Finance Minister Enoch Godongwana warned mayor Dada Morero that the city’s latest budget is unfunded, its cash position is under severe pressure, and a controversial R10.3-billion wage deal with municipal workers must be halted immediately. The warning, delivered in a second letter in less than a year, lands at a time when Johannesburg’s cash and cash equivalents sit at just R3.9-billion, far below the R25.2-billion owed to creditors.
The new letter, dated 24 April 2026, paints a stark picture of a metro teetering under debt and weak liquidity. Godongwana says the gap between what the City owes and what it can actually access in cash is a clear sign of severe financial distress. In plain terms, Treasury believes Johannesburg does not have the money to meet its obligations, even before factoring in fresh spending commitments.
The minister’s intervention goes beyond a warning. He has instructed Morero to explain how the City intends to fund the wage agreement with the South African Municipal Workers Union (Samwu), and he has ordered the municipality to stop implementing what he describes as an “illegally signed” deal. That agreement, which was meant to shut down a disruptive wage dispute before the G20 summit, has already been challenged by the DA in court.
For Johannesburg, the timing could hardly be worse. The City has spent months trying to project stability while residents continue to face broken infrastructure, unpaid bills, unreliable services and deteriorating roads. But Treasury’s latest assessment suggests the problem is no longer just about service delivery. It is now about whether the metro can keep its books afloat at all.
Godongwana’s letter makes it clear that Treasury views the wage agreement as a direct threat to the municipality’s financial sustainability. He says the commitment to pay workers R10.3-billion over two years was entered into without proper funding, and that the move may also have breached the Municipal Finance Management Act (MFMA) and related budget rules. He has demanded that Morero set out exactly how the City plans to reverse the violation and contain the damage.
The minister wrote that the City has committed itself to an obligation that is simply not possible to fulfil, given its current revenue and cash position. He warned that the decision could undermine not just Johannesburg’s own finances, but also the broader economy if left unchecked. For a metro that is already struggling to restore investor confidence, that is a serious escalation.
Johannesburg’s financial distress warning from Godongwana deepens scrutiny
Godongwana’s warning comes with several other red flags that help explain why Johannesburg’s financial distress warning from Godongwana is being taken so seriously in Treasury and on the markets. The minister says the City is not collecting enough revenue to meet targets, while Johannesburg Water has overestimated what it expects to bring in. He also says the City had overspent by R3.9-billion by the end of January on items including staff costs, bulk electricity purchases, inventory and operations.
That overspending is especially worrying because it suggests the City’s pressures are not isolated to one department. Instead, the strain appears to run through the metro’s entire financial system. Godongwana also flagged that projected revenue improvements are not holding, which indicates the City may be overestimating its ability to recover lost ground in the months ahead.
Another major concern is capital spending. The Johannesburg Roads Agency budgeted R708-million for capital expenditure, but Treasury says that money was not actually in the bank. That is the kind of mismatch that often exposes deeper weaknesses in municipal budgeting, where planned projects are announced without the cash behind them.
On top of that, the City’s equitable share allocation from Treasury has been cut sharply, from R979-million to R455.9-million. That reduction alone puts more pressure on a metro that is already fighting declining collections, ageing infrastructure and rising operating costs.
Reaction to the minister’s letter has been swift and political. Rise Mzansi’s Makashule Gana said the City is “playing politics and cutting corners to everyone’s demise”, arguing that residents are the ones paying the price for weak governance and financial mismanagement. He said the consequences are visible every day in the form of unsafe streets, leaking pipes, uncollected refuse and crumbling roads.
Labour, meanwhile, has taken a very different view. Cosatu’s Greater Johannesburg region accused Godongwana of putting “fiscal austerity over the livelihoods of workers” and ignoring collective bargaining. The federation said it wants National Treasury to step back from what it called an adversarial stance and respect the agreements reached with workers. It also warned that if the minister refuses to budge, the matter could be taken to the “highest levels of struggle”.
Samwu had not responded immediately to requests for comment when we went to press, while the City itself had not yet issued a formal response to the letter. That silence will only intensify the pressure on Morero, who now faces questions not only about the wage settlement, but about the broader state of municipal finances.
The Johannesburg crisis is also unfolding against a difficult backdrop in financial markets. In April, Moody’s placed the City’s credit ratings on review for a possible downgrade. In March, the Johannesburg Stock Exchange suspended the City’s debt instruments, which officials said was a technical issue linked to the Auditor-General. And on 22 April, Bloomberg reported that the French development funder AFD had rejected a loan request from the metro.
Taken together, those developments show that Johannesburg’s funding problems are no longer an internal administrative headache. They are now spilling into credit ratings, borrowing options and investor trust. For the City, that makes the stakes much higher than one wage dispute or one contested budget line.
What happens next will depend on whether the mayor can convince Treasury that there is a credible plan to stabilise the books, restore compliance and prevent further damage. But with R25.2-billion owed to creditors, only R3.9-billion in cash, and a wage bill Treasury says cannot be financed, Johannesburg is staring at one of the most serious municipal financial confrontations in years.