What we know so far
National Treasury has formally ordered the City of Johannesburg to stop implementing a R10.3 billion wage agreement with the South African Municipal Workers Union (SAMWU), and warned that the metro could lose more than R8 billion in central government funding from July if it fails to act.
The directive is contained in a letter from Finance Minister Enoch Godongwana to Johannesburg Mayor Dada Morero dated 23 April 2026. The letter became public on Wednesday after Democratic Alliance mayoral candidate Helen Zille shared its contents at a media briefing in Johannesburg. Bloomberg reported on the same letter earlier in the day, and Godongwana confirmed sending it when contacted by the news agency.
In the letter, Godongwana directs Morero to “cease implementation of this illegally signed agreement” and tells the mayor that the deal threatens the long-term sustainability of the city and could damage the national economy. He also tells Morero plainly that the city cannot afford the agreement.
Presidential spokesperson Vincent Magwenya, in remarks reported by TimesLIVE, confirmed that President Cyril Ramaphosa is aware of the Treasury’s intervention. Magwenya said the financial concerns formed part of the reason for setting up the Presidential Johannesburg Working Group, citing both service-delivery breakdowns and broader governance failures inside the metro.
Why it matters
Johannesburg is South Africa’s largest city by population and economic output, and the seat of the country’s financial sector. A funding cut of the scale Godongwana has flagged would land six months before the scheduled November 2026 municipal elections, at a time when residents are already contending with chronic power outages, failing water infrastructure and poor road maintenance.
The equitable share is a constitutionally guaranteed allocation that local governments use to subsidise services for low-income households. Withholding the July 2026 instalment would compress the city’s already strained cash position and deepen pressure on services to the poor. Zille told reporters that losing the allocation would be “the final nail in the City of Johannesburg’s financial coffin”.
The intervention also signals that the dispute over Joburg’s finances has moved from a technical accounting concern to a constitutional standoff between Treasury and an ANC-led coalition government in the metro. Godongwana and Morero are both ANC members, which adds an internal party dimension to the confrontation.
Key details and figures
The wage deal at the centre of the standoff was signed in 2025 between Morero’s administration and SAMWU, committing the city to R10.3 billion in salary increases over two years. According to Daily Maverick, the agreement was concluded to head off strike action ahead of the G20 summit hosted in Johannesburg later that year. The Democratic Alliance has separately challenged the deal in court.
The minister’s letter, as quoted by multiple outlets that have seen it, paints a wider picture of distress in the city’s books. Creditors are owed R25.2 billion, up from R17 billion at the end of the 2022/23 financial year, against cash and cash equivalents of R3.9 billion in 2024/25, leaving a shortfall of roughly R21.3 billion. Treasury characterises this position as a marker of severe financial distress and a sign that the city does not have the liquidity to pay its creditors.
The letter further records that Treasury reduced Johannesburg’s equitable share allocation from R979 million to R455.9 million in March 2026, citing the city’s failure to comply with reporting and budget requirements. Additional concerns flagged by Treasury and reported by Daily Maverick and Hypertext include overspending of around R3.9 billion on operational costs, inflated revenue projections at Johannesburg Water, a R708.6 million capital expenditure shortfall at the Johannesburg Roads Agency, and persistent failure to pay suppliers within the 30-day window required by the Municipal Finance Management Act (MFMA).
Godongwana also takes issue with the city’s 2025/26 adjustment budget, which Treasury assessed as unfunded in terms of section 18 of the MFMA. Business Day reported the minister as warning that the unfunded budget could result in unauthorised expenditure by June.
The letter follows a sequence of recent financial setbacks for the metro. Moody’s placed the city’s credit ratings on review for a possible downgrade in April. The Johannesburg Stock Exchange suspended trading in the city’s listed debt instruments in March. Daily Maverick reported that the French Development Agency rejected a loan request from the city on 22 April 2026.
What happens next
Godongwana has not set a fixed deadline. The letter requires the city to remedy the violations identified immediately, failing which Treasury will invoke section 216(2) of the Constitution, which empowers National Treasury to stop the transfer of funds to an organ of state that commits a serious or persistent material breach of prescribed treasury norms and standards. The targeted instalment is the July 2026 equitable share payment under the Division of Revenue Act, which Zille and the minister both quantify at more than R8 billion.
Morero now faces parallel pressure to renegotiate the SAMWU wage deal, table a funded adjustment budget, and respond to the minister’s listed transgressions. The DA’s separate court challenge against the wage agreement adds a legal track that could force changes to the deal independently of any Treasury action.
A more drastic step under section 139 of the Constitution, placing the city under provincial or national administration, has been raised in public commentary but carries political complications. Zille noted at her briefing that full administration would entail dissolving the city council and triggering another local election in addition to the November poll already scheduled.
The City of Johannesburg had not issued a public response to the letter at the time of publication. Bloomberg reported that a city spokesperson did not answer calls made to their mobile phone, and Daily Maverick reported the city had not commented by its publication deadline. SAMWU had also not immediately responded to media requests for comment, according to Daily Maverick.
Whether Morero complies with the directive, contests it, or proposes an alternative funding plan will determine whether the July equitable share is paid in full, withheld, or made conditional on remedial steps.
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