Bank loan

SA to secure $750m loan from World Bank to boost economic recovery

Marie Françoise Marie-Nelly, the World Bank’s director for South Africa, said the loan would relieve “the effects of the most severe economic crisis that South Africa has experienced in the past 90 years, while tackling long-standing challenges to growth and development”. Image: Provided

The World Bank announced Friday morning that it had approved South Africa’s request for a loan of $750 million (about R11.4 billion).

“This loan will support the South African government’s efforts to accelerate its response to Covid-19 aimed at protecting the poor and vulnerable from the adverse socio-economic effects of the pandemic and supporting a resilient and sustainable economic recovery,” the statement said. World Bank and SA. National Treasury said in a joint statement.

In July 2020, the International Monetary Fund provided SA with a loan of $4.3 billion (approximately R70 billion at the time) to support job creation and the protection of businesses affected by the Covid pandemic -19. In April 2021, it was announced that SA would secure a $1 billion (R14.5 billion at the time) loan from the New Development Bank (NDB). The NDB is a development finance institution created by Brazil, Russia, India, China and South Africa as part of the BRICS grouping.

The World Bank and Treasury said on Friday that the $750 million Development Policy Loan (DPL) at “low interest” is intended to support the country’s implementation of the reconstruction and recovery plan. economy of the country. According to the statement, this will enhance the stability of the financial sector – in particular the establishment of a deposit insurance scheme, and support “South Africa’s commitment to climate change”.

“The World Bank’s budget support comes at a critical time for us and will help fill the funding gap resulting from additional spending in response to the Covid-19 crisis,” said Treasury Director General Dondo Mogajane.

“This will help meet the immediate challenge of funding critical social and health safety net programs while continuing to develop our economic reform agenda to build back better.”

Marie Francoise Marie-Nelly, the World Bank’s director for South Africa, said the loan would relieve “the effects of the most severe economic crisis that South Africa has experienced in the last 90 years, while tackling long-standing challenges to growth and development”. ”

“This support aims to put the country on a more resilient and inclusive growth trajectory by leveraging South Africa’s strength in mitigating the effects of the Covid-19 crisis through its strong social safety net and by advancing essential economic reforms”.