Johannesburg faces R25 bn debt crisis as finance minister warns of bankruptcy

South Africa’s Finance Minister Enoch Godongwana sent a strongly worded letter to Johannesburg Mayor Dada Morero warning that the municipality is effectively bankrupt. The city reportedly owes more than R25 billion to creditors while holding less than R4 billion in cash, and the minister threatened to withhold an R8 billion tranche of funding unless corrective action is taken.

The dispute centres on a contested R10.3 billion wage agreement with the South African Municipal Workers’ Union (SAMWU). Treasury argues the deal is unaffordable and may breach the Municipal Finance Management Act, while SAMWU says the phased payment plan accounts for the city’s constraints and aims to correct historic wage disparities.

Political fallout has intensified ahead of national elections. The ANC, which governs the metro, faces pressure from its trade‑union allies and criticism from opposition parties. Cosatu’s Gauteng chair accused the finance minister of bad faith, and the ANC’s regional leadership is navigating a delicate balance between fiscal discipline and union support.