Joburg in Crisis? Zille Alleges Treasury Cautions City About Imminent Financial Collapse
Helen Zille has asserted that the Johannesburg metro is essentially insolvent following the leak of a dramatic letter reportedly sent by Finance Minister Enoch Godongwana to the DA.
As per Zille, the correspondence, which was directed to Joburg mayor Dada Morero and dated 23 April, disclosed that the city is indebted to creditors for R25.2 billion while possessing only R3.9 billion in cash and equivalents.
– Advertisement –
This results in an alarming deficit of R21.3 billion for the metro.
Zille remarked: “This is the fundamental reason behind the city’s failure to maintain or repair infrastructure, which leads to ongoing power and water outages as well as the inability to resolve breakdowns, resulting in the gradual degradation of services across the board.”
She further contended that Godongwana cautioned that the city has violated laws pertaining to municipal finances, with these alleged breaches posing a “serious threat to the sustainability of the City of Joburg beyond this term of office, alongside adverse implications for the national economy as a whole.”
Zille Warns R8 Billion Treasury Cut Could Be ‘Final Nail In The Coffin’
Zille claimed that the finance minister issued a formal notification indicating that the National Treasury could invoke Section 216(2) of the Constitution if the metro does not immediately rectify its financial situation.
According to her, this could lead to the Treasury withholding more than R8 billion allocated to the city under the Division of Revenue Act.
“This totals over R8 billion, which would be the final nail in Johannesburg’s coffin,” Zille stated.
– Advertisement –
She also highlighted what she labeled a series of significant financial challenges faced by the city in recent months.
Among these was the refusal by the Agence Française de Développement to sanction a second R2.5 billion loan after the city allegedly did not meet conditions linked to a prior 2024 loan.
Zille claimed that the city’s bonds were suspended by the Johannesburg Stock Exchange due to the failure to submit audited annual financial statements punctually.
Moreover, she noted that Moody’s has issued warnings of a potential further downgrade to the city’s credit rating, and audit outcomes are expected to deteriorate.
Finance Law Violations And Wage Deal Under Fire
Zille stated that the minister’s alleged letter identified several grave financial irregularities by the metro.
These reportedly included passing an unfunded adjustment budget in March despite Treasury’s warnings, not adhering to Municipal Standard Chart of Accounts regulations, and failing to curb irregular, fruitless, and wasteful expenditures.
She also accused the city of breaching the Municipal Finance Management Act by not paying creditors within 30 days of receiving invoices.
Another key issue was the inclusion of a politically negotiated wage adjustment agreement in the adjustment budget.
Zille claimed the minister required the city to “cease the implementation of this illegally signed agreement.”
YOU MAY ALSO LIKE: Presidency Rejects Xenophobia Claims, Compares Them To ‘White Genocide’ Narrative In South Africa
According to Zille, the DA has been warning for over three years that Johannesburg was on a path toward financial disaster.
“We have consistently cautioned in council that the actions mentioned in the minister’s letter were unlawful, and we would pursue corrective actions under Section 32 of the MFMA,” she stated.
“This implies we will aim to hold all councillors who endorsed these illegal decisions in council personally accountable for recovering the funds lost by the city under Section 21 (1) of the MFMA, which asserts that ‘political office bearers or officials who deliberately or negligently permit such expenditures are personally liable.’”
Meanwhile, ANC Johannesburg regional secretary Sasa Manganye indicated that the party would respond to both Zille’s statements and the alleged Treasury letter.
– Advertisement –