South Africa's richest city, Johannesburg is scrambling to restore billions in suspended government funding while preparing to tap the bond market to finance long-overdue infrastructure upgrades.

The City says it will begin paying key creditors by next week in a bid to unlock R3.6 billion ($200 million) in withheld government funds, Bloomberg reported.

Earlier this week, South Africa took the extraordinary step of temporarily withholding state funding from 69 municipalities, including Johannesburg, as part of a sweeping crackdown on financial mismanagement that has engulfed dozens of municipalities ahead of November's local elections.

The move forms part of a broader effort to improve fiscal discipline, reduce irregular spending, and ensure municipalities meet their financial obligations before receiving additional public funds.

Treasury said funding would be released in phases once municipalities submit credible repayment plans and demonstrate progress in improving financial management.

Johannesburg Mayor Dada Morero said the city plans to pay nearly R2.4 billion owed to major creditors, including Eskom and Rand Water, by mid-July. To secure the remaining funding, Johannesburg must also reduce unauthorised, irregular, fruitless and wasteful expenditure by at least 25% before the end of September and formalise repayment agreements with creditors.

National Treasury estimates South African municipalities have accumulated R24.1 billion in irregular and wasteful expenditure since the 2021/22 financial year.

Beyond addressing its immediate cash challenges, Johannesburg is also advancing plans to issue municipal bonds to finance the rehabilitation of ageing roads, electricity infrastructure, water systems, and other public assets.

The proposed bond sale comes as the city faces growing pressure to modernise infrastructure that has suffered years of underinvestment, contributing to frequent electricity outages, water supply disruptions, and deteriorating public services.