The City of Johannesburg has accepted National Treasury’s decision to withhold about R3.6 billion in equitable share funding, insisting its budget remains fully funded while promising to settle its debts to Eskom and Rand Water by mid-July.
Briefing the media on Wednesday, the Mayor Dada Morero said the city had been engaging National Treasury through several intergovernmental platforms, including the Presidential Finance Working Group, and would fully comply with the process initiated under Section 216(2) of the Constitution and the Municipal Finance Management Act (MFMA).
The response comes a day after National Treasury announced it had temporarily withheld R13.5 billion in equitable share allocations from 69 municipalities over persistent financial mismanagement, with Johannesburg accounting for the largest share of the frozen funds.
Morero said the city’s engagements with Treasury had already yielded positive results, revealing that Treasury had confirmed Johannesburg’s 2026/27 budget was funded.
“Our working relationship with National Treasury is yielding results. As we speak, we have received correspondence from National Treasury confirming that the City’s 2026/27 annual budget is funded. This is comforting feedback as it confirms that our financial management is okay and has not reached a crisis state.
“However, more needs to be done to manage our cash flow and revenue performance,” he said.
Morero said the city had already begun implementing measures aimed at addressing Treasury’s concerns and improving its financial position.
Among the immediate interventions, he said, was a commitment to settle outstanding payments owed to Eskom and Rand Water by the middle of July.
The city has also revised its strategy to reduce unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) to align with National Treasury’s guidance and the relevant MFMA circulars.
Morero said Johannesburg was also working through its historical backlog of irregular expenditure instead of merely disclosing it.
He said the Municipal Public Accounts Committee had recommended the regularisation of R918.4 million in expenditure, while the boards of the Johannesburg Roads Agency, Johannesburg City Parks and Zoo, the Johannesburg Development Agency and Pikitup had regularised a further R878.3 million.
Combined, this amounts to about R1.8 billion in expenditure that has been dealt with through governance processes, while a further R6.4 billion remains before municipal entity boards for consideration.
Morero said the city had also identified the primary drivers of new irregular expenditure instead of treating UIFWE as a single figure.
He said City Power’s overspending on bulk electricity purchases, amounting to R2.1 billion by the end of the third quarter, remained the biggest contributor.
The mayor also announced measures to stabilise Pikitup’s finances after cash flow challenges threatened refuse collection services.
He said the Mayoral Committee had approved interventions to ring-fence funding for fleet maintenance, fuel, landfill operations and other essential services under the Metro Trading Services Reforms Programme.
An initial operational allocation would also be prioritised to settle outstanding payments owed to service providers and restore supplier confidence.
“It is important to note that operations have resumed as of yesterday,” Morero said.
He acknowledged, however, that Johannesburg’s billing and revenue collection systems still require significant modernisation.
Morero sought to reassure residents that despite Treasury’s intervention, the city remained focused on protecting essential services.
He said improved revenue collection and cost containment measures would be directed towards safeguarding water, electricity, waste collection and public safety services while protecting free basic services for indigent households.
He added that the city would continue borrowing responsibly to finance critical infrastructure, including a €200 million (about R3.8 billion) facility secured from German development bank KfW for City Power’s electricity infrastructure and approximately R1.75 billion for Johannesburg Water capital projects over the coming years.
While acknowledging the city’s financial challenges, Morero said they had accumulated over many years and were now being addressed through greater financial discipline.
“Johannesburg is the economic heartland of this country. The challenges we face are real but not insurmountable, and they did not arise under this administration alone; many have built up over the years.
“What is new is the discipline, transparency and accountability with which we are now confronting them,” he said.
Morero said the city would continue reporting its progress to Council, National Treasury and residents as it worked to improve its financial position and secure the release of the withheld funds.
Separately, he urged residents to prepare for Rand Water’s second and final phase of planned maintenance on 17 July, warning that several parts of Johannesburg could experience low water pressure or temporary water interruptions while reservoirs recover after the 12-hour shutdown.
He said Johannesburg Water had put contingency measures in place, including maximising reservoir storage ahead of the maintenance and deploying water tankers to affected communities where necessary.
