The National Treasury has withheld part of the City of Johannesburg's July 2026 equitable share allocation after concluding that South Africa's economic hub had failed to adequately address serious concerns over its financial management, governance and compliance with the Municipal Finance Management Act.
Finance Minister Enoch Godongwana confirmed the decision in a statement on Tuesday. He said the city was part of 70 municipalities that would be affected by section 216 of the Constitution for failing to comply with prescribed financial management measures.
“National Treasury is in the process of temporarily withholding the July 2026 equitable share transfers to selected municipalities to instil fiscal discipline and ensure that public money is properly managed; that unauthorised, irregular, fruitless and wasteful expenditure is addressed; and that municipal officials and office-bearers are held accountable where required by law.”
Other municipalities affected by the intervention include Nelson Mandela Bay Metropolitan Municipality and Mangaung Metropolitan Municipality.
Godongwana said the municipalities had not sufficiently addressed concerns raised by the Treasury despite months of engagement, prompting the temporary withholding of part of its July allocation.
Municipalities rely largely on income from property rates and the fees residents and businesses pay for municipal services, with additional funding provided through allocations from the national government's equitable share.
The decision follows exchanges between Treasury and mayor Dada Morero that began in May.
The temporary withholding of funds is expected to place further strain on Johannesburg's finances as the metro grapples with substantial debt owed to bulk electricity and water providers, while facing challenges in maintaining essential infrastructure and delivering services such as road maintenance.
Morero did not respond to requests for comment.
In correspondence sent earlier this year, Treasury warned Johannesburg about its governance failures, irregular expenditure, liquidity pressures and an unfunded adjustment budget, before giving the city seven days in June to explain why the July transfer should not be withheld.
The notice also cited mounting debt and continued weaknesses in the city's financial management.
At the time, Morero rejected suggestions that Johannesburg was bankrupt, insisting the metro remained financially viable and submitting what the mayor's office described as remedial plans to the Treasury.
City officials have said they remained committed to addressing the issues raised and would continue to engage the department.
Johannesburg approved a R97.1 billion budget for the 2026-27 financial year while attempting to stabilise its finances through tariff increases, improved revenue collection and a R3.8bn loan from German development bank KfW for City Power.
The city continues to face financial pressure, including outstanding obligations to Eskom and Rand Water, recurring service delivery failures and repeated audit findings highlighting weaknesses in financial management.
Opposition parties said Treasury's intervention vindicated long-standing warnings about Johannesburg's deteriorating finances.
ActionSA party leader Herman Mashaba said Treasury's decision confirmed its concerns over the metro's growing financial crisis and unsustainable spending commitments, including the public sector wage agreement.
“ActionSA has consistently pointed to the chronically failed ANC coalition government that is sponsored by the Democratic Alliance. Our position is that residents should not bear the brunt of poor fiscal discipline, binding them to a growing debt burden on their futures.
“Residents should demand answers from this government as to why its leaders are committed to unsustainable debt that has no positive effect on improving service delivery.
“More of the same failure to deliver basic services will persist, with the Democratic Alliance supporting the ANC in council decisions that will not improve the living standards of residents.
“What is concerning is that COJ received a R3.8 billion loan from Germany’s KfW Development Bank earlier this year. In May 2026, Finance Minister Godongwana threatened to withdraw funds to the city over the R10 billion wage agreement with unions that it regards as illegal,” Mashaba said.
The South African Local Government Association said it was aware of Treasury’s statement on its measure to temporarily withhold July 2026 equitable share transfers.
“Salga will in due course communicate its position in relation to the current process,” spokesperson Motalatale Modiba said.
Discussions between the department and the city of Johannesburg are continuing.