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Johannesburg and dozens of other South African municipalities face an immediate funding freeze after the National Treasury suspended their allocations over high, wasteful spending and non-compliance with financial regulations.
Treasury officials announced on Wednesday that the government will withhold 3.6 billion rand ($220 million) from Johannesburg in July, while around 69 other municipalities will lose a portion of their funding until September.
The country expects these local governments to slash wasteful expenditure by at least 25 per cent before it releases the cash. This move comes just ahead of hotly contested local elections on November 4.
Ogalaletseng Gaarekwe, Treasury’s deputy director general of intergovernmental relations, clarified that the intervention does not place the country’s economic hub under direct administration.
The disciplinary action follows repeated warnings from Finance Minister Enoch Godongwana regarding Johannesburg’s fragile fiscal health.
In May, the city approved a 97.1 billion rand ($5.98 billion) budget that the Treasury deemed unfunded because planned expenditures outpaced realistic revenue projections and included a sharp increase in municipal wages.
Local media reports indicate the cash-strapped city currently holds only five to 17 days of cash reserves.
