Johannesburg faces R2.1bn funding gap as its bills mount

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 R2.1 billion ($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.

Read:
Johannesburg is not poor, it is badly managed
Johannesburg collapse risk spurs call for state to run city
Outa warns of potential court showdown to stop Eskom cutting Joburg’s power

The metro forecasts an overall budget deficit of R7 billion for this fiscal year.

The Treasury advised city authorities to narrow the gap by improving revenue collection and rationalising 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 R8 billion in state funding because the city signed a R10.3 billion 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 November 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 the nation, impacting growth and tax revenue.

Read:
Clock is ticking as Godongwana gives CoJ new notice over funding cuts
Johannesburg adds 700 managers as city struggles to pay bills
City of Joburg secures R3.8bn loan to fix its electricity woes

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 stabilise labour 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:
Pothole, signal repairs halted as CoJ liquidity concerns mount
Solving Johannesburg’s debt crisis is critical for both Eskom and CoJ

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 R1.44 billion bond, prioritising investors amid its financial struggles.

© 2026 Bloomberg