Leaked letter reveals Joburg owes creditors R25.2 billion with only R3.9 billion cash, prompting National Treasury threat to withhold funds.
DA Joburg mayoral candidate Helen Zille claims Finance Minister Enoch Godongwana has effectively declared the city bankrupt.
Zille said in a letter to mayor Dada Morero, from Gondongwana and dated 23 April, which was leaked to the DA, the minister said the city owes its creditors R25.2 billion, while only having cash and cash equivalents in hand of R3.9 billion.
Joburg owes R25.2 billion but holds R3.9 billion cash – Gondongwana letter
This means the city does not have the money to pay R21.3 billion owed to its creditors.
“This is the core reason behind the city’s inability to repair or maintain infrastructure, leading to consistent power and water outages and the failure to fix breakdowns, resulting in the steady collapse of service provision across the board,” Zille said.
She claimed Gondongwana also said in the letter that the city has violated the laws governing municipal finances and that these illegal actions have the “potential to destroy the sustainability of the City of Joburg beyond this term of office, as well as the negative impact on the national economy at large”.
The minister then allegedly issued a formal notice to the city that if it is not willing to “remedy this situation with immediate effect”, National Treasury will invoke Section 216 (2) of the constitution and hold back Johannesburg’s allocation under the Division of Revenue Act.
“This amounts to over R8 billion, which would be the final nail in Johannesburg’s coffin,” Zille said.
‘Several financial body blows’
She then outlined what she called “several financial body blows” to the city in recent months:
- The Agence Française de Développement refused the city’s request for a second loan of R2.5 billion because the city had failed to comply with conditions attached to an earlier loan granted in 2024;
- The city’s bonds were suspended by the Johannesburg Stock Exchange for failing to submit the audited annual financial statements timeously;
- Moody’s has warned of a further downgrade in the city’s credit rating; and
- The expected regression in the city’s audit outcome.
Zille said Godongwana had listed the metro’s transgressions, including:
- The adjustment budget passed in March is not funded. This amounts to unauthorised expenditure, a serious violation of the law. The city proceeded to pass the budget despite Treasury’s warnings;
- The city’s failure to comply with the requirements of the Municipal Regulations on the Municipal Standard Chart of Accounts;
- The city’s failure to prevent and address unauthorised, irregular, fruitless and wasteful expenditure; and
- The failure of the city to pay its creditors within 30 days of receiving an invoice, which is a violation of the Municipal Finance Management Act (MFMA).
- The unlawful introduction of the politically facilitated agreement on wage adjustments into the adjustment budget.
The minister instructed the city to “stop proceeding with the implementation of this illegally signed agreement”. This vindicated the DA’s warning about the devastating financial impact of this agreement on the city.
Finance minister warned city violated finance laws
Zille said the DA “has been warning for more than three years that the city was headed for a major financial crisis”.
“We have also consistently warned in council that decisions, alluded to in the minister’s letter, were unlawful and that we would pursue corrective measures under Section 32 of the MFMA,” she said.
“This means we will seek to hold all councillors who supported these illegal decision in council personally responsible for the recovery of the money lost to the city under Section 21 (1) of the MFMA, which states that ‘political office bearers or officials who deliberately or negligently permit such expenditures are personally liable’.”
The ANC’s regional secretary in Johannesburg, Sasa Manganye, said the party would issue a statement in response to Zille’s comments and Godongwana’s letter.
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