JOHANNESBERG, July 9 – South Africa’s National Treasury has suspended part of its funding to Johannesburg and dozens of other municipalities over continued failures to comply with financial management regulations.
The funding freeze, announced on Wednesday, comes ahead of the country’s November 4 local elections, with Johannesburg expected to be one of the key battlegrounds.
According to Treasury officials, 3.6 billion rand ($220 million) due to Johannesburg for July will be withheld. In total, 69 municipalities will have part of their funding suspended until September unless they can show they have reduced wasteful spending by at least 25%.
Treasury Deputy Director-General for Intergovernmental Relations, Ogalaletseng Gaarekwe, said the decision followed persistent and serious non-compliance with financial management rules.
Johannesburg has been under increasing scrutiny over its finances with Finance Minister Enoch Godongwana repeatedly raising concerns about the city’s financial management.
In May, Johannesburg approved a 97.1 billion rand ($5.98 billion) budget that the National Treasury described as unfunded, saying planned spending exceeded realistic revenue projections and included a significant increase in the municipal wage bill.
Local media have also reported that the cash-strapped city has between five and 17 days of cash reserves available.
The affected municipalities now have until September to demonstrate improvements in their spending practices or risk an extended suspension of funding.
