Joburg starts new fiscal year already broke - and Godongwana may pull the plug

Johannesburg enters its new financial year with a 2.1 billion-rand ($128m) hole in its budget, National Treasury has found - and the numbers get worse from there. The city's overall deficit sits at 7 billion rand, cash reserves hit just five days' cover in March (versus Treasury's 30-day minimum), and Finance Minister Enoch Godongwana is threatening to withhold 8 billion rand over an "illegal" wage deal. With Johannesburg generating 16% of national GDP, Bloomberg's Prinesha Naidoo flags the systemic risk: continued deterioration could force provincial administration - and rattle growth and tax revenue nationally ahead of November's municipal elections..By Prinesha Naidoo.Johannesburg is starting a new financial year with a multibillion-rand budget that’s not fully funded, potentially deepening a crisis that’s already left it unable to pay for power and fuel supplies.South Africa’s biggest city is facing an unfunded budget gap of about 2.1 billion rand ($128 million) for the year starting July 1, according to a framework seen by Bloomberg News. The National Treasury attributed the shortfall to city revenue projections that appear overstated relative to audited results, according to the document.The metro forecasts an overall budget deficit of 7 billion rand for this fiscal year. The Treasury advised city authorities to narrow the gap by improving revenue collection and rationalizing the 6-kiloliter free water allowance for non-indigent households. It also recommended resolving affordability concerns over the second phase of a personnel finance agreement, which requires a binding decision by the city council before the final budget can be approved, the framework shows.The Treasury declined to comment, citing confidentiality, while the city didn’t respond to multiple requests for comment. Johannesburg is on the verge of financial collapse, owing hundreds of millions of dollars to state power and water utilities and facing looming power cuts due to unpaid bills. South African Finance Minister Enoch Godongwana has also threatened to stop 8 billion rand in state funding because the city signed a 10.3 billion-rand wage deal that he says is illegal and unaffordable. .Run by an African National Congress-led alliance, Johannesburg has descended deeper into dysfunction in recent months and is expected to be among the fiercest battlegrounds in the Nov. 4 municipal vote.The deterioration in its finances has alarmed business and the government because the city is South Africa’s economic hub, contributing about 16% to the nation’s gross domestic product. A financial collapse would reverberate across nation, impacting growth and tax revenue. The city council discussed the turnaround framework on June 24, with several councilors stressing implementation is key to recovery and calling for metro authorities to provide regular, transparent updates. The blueprint showed the city had just five days of cash to cover costs in March, far short of the Treasury’s minimum 30-day benchmark for the new financial year. It comprises six pillars including measures to protect and grow the city’s revenue base, strengthen financial governance and stabilize labor relations. Godongwana’s warning that he may withdraw funding adds to a litany of mismanagement and corruption scandals that have beset the city. If he carries out the threat, Johannesburg’s finances are likely to deteriorate further, possibly requiring the appointment of an administrator by the provincial government..Read more:.Johannesburg on the brink: Business groups demand state intervention as city faces financial collapse.Moody’s Ratings in April placed the city’s Ba3 credit rating on review for a possible downgrade after the Johannesburg Stock Exchange suspended the municipality’s debt securities over its failure to publish audited financial statements.Last week, the city repaid a 1.44 billion-rand bond, prioritizing investors amid its financial struggles. .© 2026 Bloomberg L.P..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here. Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Joburg starts new fiscal year already broke - and Godongwana may pull the plug

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