The City of Johannesburg has been placed under intense pressure by National Treasury, which has warned it could withhold billions in funding if the metro fails to urgently address its deteriorating financial position.

In a strongly worded letter sent to Johannesburg Mayor Dada Morero at the end of April, Finance Minister Enoch Godongwana criticised the city’s executive leadership over what he described as severe financial governance failures.

One of the biggest concerns raised was a 2025 wage agreement between the city and labour unions that commits Johannesburg to R10.3 billion in salary increases.

Godongwana instructed the city to immediately halt implementation of the deal, warning that Johannesburg simply cannot afford it.

“You are hereby directed to stop proceeding with the implementation of this illegally signed agreement,” the minister wrote, adding that it could “destroy the sustainability” of the city.

Democratic Alliance federal chairperson and Johannesburg mayoral candidate Helen Zille said the Treasury letter exposes the true scale of the metro’s financial crisis.

According to Zille, the city owes creditors R25.2 billion while holding only R3.9 billion in available cash and cash equivalents.

She argued that the shortfall is contributing directly to failing infrastructure, frequent power and water outages, and worsening service delivery across the city.

Treasury also warned that Johannesburg’s March adjustment budget was not properly funded, which could amount to unauthorised expenditure in violation of municipal finance laws.

The minister indicated that if the city fails to urgently remedy the situation, Treasury may invoke Section 216(2) of the Constitution and withhold Johannesburg’s allocation under the Division of Revenue Act from July.

Zille warned that this could strip the city of more than R8 billion in funding.

The warning comes amid several additional financial setbacks for Johannesburg, including the rejection of a second R2.5 billion loan from the Agence Française de Développement, the suspension of the city’s bonds by the Johannesburg Stock Exchange, and the possibility of a further credit downgrade by Moody’s.

Opposition parties have accused the ANC-led coalition government of ignoring repeated warnings about the city’s financial decline.