The World Bank has approved a $750-million (about R11.4-billion) development policy loan for South Africa, the treasury announced on Friday.
The loan is to assist the government with its Covid-19 response and is in line with the World Bank’s crisis response approach aimed at protecting lives, livelihoods and supporting a more inclusive and resilient growth path.
As the country continues to battle its fourth wave of the virus, treasury director general Dondo Mogajane said the World Bank’s support came at a critical time and would address the financing gap stemming from additional spending in response to Covid-19.
“It will assist in addressing the immediate challenge of financing critical health and social safety net programmes whilst also continuing to develop our economic reform agenda to build back better,” he said.
The World Bank country director for South Africa, Marie Françoise Marie-Nelly, said the development policy loan illustrates the bank’s partnership with the South African government to stimulate the economy.
“This support aims to put the country on a more resilient and inclusive growth path by leveraging South Africa’s strength to mitigate the effects of the Covid-19 crisis through their strong social safety net and by advancing critical economic reforms,” she said.
As the second largest economy in Africa after Nigeria, South Africa’s performance has spillover effects on the region and it’s improved economic development would provide a boost to other countries.
The treasury said the loan was at a low interest rate and would contribute towards the government’s fiscal relief package, reinforcing the decisions on how best to provide relief to the economy and those worst affected by the health crisis.
The loan comes after months of negotiations with the World Bank and complements funds the country received in 2020 from the International Monetary Fund, the New Development Bank (formerly called the Brics Development Bank) and the African Development Bank to grapple with Covid-19 and mitigate its effect on the economy.
The treasury did not say what conditions of the loan were.
Anathi Madubela is an Adamela Trust business reporter at the M&G.